is a tax form
A tax form is a blank document or template supplied by a government for use in the reporting of tax information to the government or to potential taxpayers...
filed by United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
employers for each director and for each employee earning over £
The pound sterling , commonly called the pound, is the official currency of the United Kingdom, its Crown Dependencies and the British Overseas Territories of South Georgia and the South Sandwich Islands, British Antarctic Territory and Tristan da Cunha. It is subdivided into 100 pence...
8500 per year, and sent to the tax office with which their PAYE
Pay as you earn or PAYE refers to a system of withholding of income tax from payments to employees. Amounts withheld are treated as advance payments of income tax due. They are refundable to the extent they exceed tax as determined on tax returns. PAYE may also refer to withholding of the...
scheme is registered. P11Ds are used to report benefits provided and expense payments made to employees by employers that are not put through the payroll. The employees are also given a copy, should they need it for a self-assessment tax return
In the United Kingdom, a tax return is a document that must be filed with the HM Revenue & Customs declaring liability for taxation. Different bodies must file different returns with respect to various forms of taxation...
This is not to be confused with form P11
(Deductions Working Sheet
), which is for tracking deductions made by PAYE.
A similar form P9D
(Expenses payments and income from which tax cannot be deducted
) for employees earning less than £8500 per year.
There are currently 14 sections of the P11D:
- A Assets Transferred
- B Payments made on behalf of the employee
- C Credit Cards and vouchers
- D Living Accommodation
- E Mileage Allowances
- F Cars and car fuel
- G Company Vans
- H Beneficial Loans
- I Medical Health
- J Qualifying Relocation Payments
- K Services Supplied
- L Assets placed at employee's disposal
- M Other Items
- N Expenses Payments
To calculate the amount that an employee will have to pay tax on, the employer has to calculate a cash equivalent of the provided benefit/expense. Most cash equivalents are straight forward being the amount the employer pays for the provision of a service less any amount the employee reimburses to their employer. However there are some quite complicated areas of UK benefits legislation that have to be interpreted to arrive at a cash equivalent e.g. Company cars, Beneficial loans etc.
Employer's obligations are to calculate these cash equivalents and report these details to employees and HMRC by 6 July following the end of a tax year (ending 5 April). It is estimated that 5 million P11Ds are submitted to HMRC annually. The most popular method of submission remains hard copies however there is a significant growing proportion that submit via the File by Internet route using XML
Extensible Markup Language is a set of rules for encoding documents in machine-readable form. It is defined in the XML 1.0 Specification produced by the W3C, and several other related specifications, all gratis open standards....
There is the potential for hefty penalties to be imposed if P11D returns are not completed or are incorrectly returned. Therefore most larger employers tend to utilise software to improve the accuracy of their data.
Because the rules require that all payments for expenses, including reimbursed expenses, be reported on form P11D, compliance can be onerous. To reduce the compliance burden employers can apply to HM Revenue and Customs for a dispensation, which removes the requirement to report expense payments for which employees can claim a corresponding deduction. It is a condition that the employer has in place an adequate independent system for checking and authorising payments.