Employers need to be ready to report all benefits and expenses paid to employees during the 2017/18 tax year ahead of the 06 July 2018 deadline to avoid being penalised by HMRC for late payment.

Taxable benefits include company cars, health insurance, non-business travel or entertainment expenses, and assets provided by an employer that have significant personal use. Each taxable employee benefit is calculated differently, depending on the type of expense or benefit provided.

Most taxable employee benefits can be deducted through payroll, so long as the employer has registered with HMRC before the start of the tax year. Otherwise, businesses may need to submit a P11D form to HMRC for any taxable expenses or benefits that have not been deducted through the payroll mechanism.

However, even if you have put employee benefits through payroll during 2017/18, employers still need to send a completed P11D(b).

These forms enable HMRC to calculate how much you need to pay in class 1A National Insurance Contributions (NICs), as well as how much PAYE is due from the employee on the benefit. This is then normally collected from the employee by adjusting their tax code, with each benefit in kind having a different code.

It’s important to get this right to ensure the correct amount of tax is paid, while an exemption system is in place for certain benefits that are not liable for tax; these include costs related to travel, business entertainment, business credit cards, fees and subscriptions.

There’s a penalty of £100 per 50 employees for each month or part month the P11D(b) is late, with interest also charged on late payments to HMRC.

The deadline for paying class 1A NICs is slightly later, on 22 July 2018 (or 19 July if paying by cheque), and financial penalties apply if you are late.

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Find out more about P11D requirements; give us a call today on 01483 205890.