GORDON WILKINSON explains how the reporting of employment benefits has changed since April 2016.
Following the end of the 2016/17 tax year, many businesses will now be collating information for the purpose of preparing P11ds, the forms used to report employment benefits and expense payments to HMRC. The forms must be filed with HMRC by 6 July 2017.
HMRC has had a rethink regarding the appropriate treatment of certain types of employee benefits and payments to employees, so here is a roundup of some key changes which will influence the entries required on P11ds.
Exempt payments, such as reimbursement of the cost of business travel, no longer have to be reported on P11ds. The previous system required employees to take additional steps to claim relief for the allowable business expenses that were reported on their P11ds. Many businesses previously had a dispensation in place with regard to travel expenses, but these no longer apply as the items covered should be covered by the exemption. It is important to note that the onus is still on businesses to retain good records of all such payments, despite the removal of the reporting requirement.
There is now an exemption for trivial benefits to allow non-cash gifts of £50 or less to be made to employees without tax or national insurance. Any number of gifts can be made, but it is key that they are not contractual or rewards for employment performance. A cap of £300 per tax year applies to gifts to directors of small companies and their families.
Where a business has adopted to tax employee benefits via payrolling there may be no requirement for a P11d at all. It should be remembered that vouchers and credit cards, living accommodation, and interest free and low interest loans are not able to be payrolled.
P9D forms for lower paid employees were abolished on 6 April 2016. Benefits in kind provided to all employees will be calculated in accordance with the previous rules for so-called higher paid employees and directors, and where appropriate will be reportable on forms P11D.
As with all changes to taxation rules, each change comes with a raft of technical details, but these are the headline points to be aware of when comparing 2016/17 P11d forms with those of the previous tax year.