Benefits and the Tax Consequences
At the end of each tax year, you will usually need to submit a P11D form to the tax office for each employee you have provided with expenses or benefits, for example, a company car.
The total taxable benefits you provide to all employees will also create a Class 1A employer’s NIC charge, and this will need to be reported to HMRC by filing a further return, P11D(b).
Note: If HMRC have asked you to submit a P11D(b), but you have no taxable benefits to report, you can tell them you do not owe Class 1A NIC by completing a formal declaration via your online government gateway account.
What are the filing deadlines for 2020-21?
| What you need to do | Deadline |
|---|---|
| Submit your P11D forms online to HMRC | 6 July 2021 |
| Give your employees a copy of the information on your forms | 6 July 2021 |
| Tell HMRC the total amount of Class 1A National Insurance you owe on form P11D(b) | 6 July 2021 |
| Pay any Class 1A National Insurance owed on expenses or benefits | Must reach HMRC by 22 July 2021 (19 July 2021 if you pay by cheque) |
Note: You will be charged a penalty of £100 per 50 employees for each month or part month your P11D(b) is late. You will also be charged penalties and interest if you are late paying HMRC.
Talk to Us Before You File Your P11D Returns
There may be tax saving opportunities you could discuss with employees that would save them income tax and you the additional NIC charge. We have outlined two ideas for company car drivers you could consider below.
Avoiding the Car Fuel Benefit Charge
Employees not only pay additional tax for the use of a company car, but they also pay a hefty additional tax charge if their employer pays for private fuel. The car fuel benefit charge can be avoided if the employee records actual private mileage and repays their employer based on an agreed rate per mile.
Were Company Car Drivers Furloughed During 2020-21?
If any of your employees that had the use of a company car were furloughed during 2020-21, and the car was not made available for private use during this period, you can advise HMRC of the “not available” period when you complete their P11D. This will reduce any benefit charges for 2020-21.
Let Us Help You Crunch The Numbers
Please call if you would like to discuss options to reduce BiK tax charges for your employees or prepare and file the necessary returns. And do not forget, if you can reduce income tax charges for employees you will not only boost their moral, but you will also lower the amount of Class 1A NIC that you will have to pay as their employer.