It’s that time of year again when attention moves from self-assessment deadlines to completing forms P11d to record employee benefits. So what are the changes to watch out for in the 2016/17 form, and what changes are on the horizon?

First of all, be aware of the deadline; forms must be filed, with a copy given to employees, by 6 July 2017.

What to report on the 2016/17 P11d

Typical employee benefits that still need to be reported on a P11d include:

  • Private medical insurance
  • Company cars and fuel
  • Interest free loans
  • Staff entertaining if above £150 per employee
  • Assets provided to the employee with a clear personal benefit

Payrolling benefits

Since 6 April 2016 employers have been able to use the payroll to collect tax due on benefits provided to employees. To use Payrolling, employers have to inform both the tax office and their employees before the start of the tax year (or before the first pay day where an employee commences employment part way through a year). Not all benefits need be payrolled.

Tax due on payrolled benefits is then collected via the payroll, so that at the end of the tax year employees should have paid all of the tax due on those benefits. By 1 June following the end of the tax year (i.e. by 1 June 2018 for 2017/18), employers have to inform their employees which benefits were payrolled and the value of those benefits.

Dispensations

Since 6 April 2016 there has been a significant change in the dispensations regime.

Before April 2016, employers had to prepare P11ds even where there were no taxable benefits, for example where employees were simply repaid certain allowable business expenses that they had incurred. The expenses went on the P11d and employees claimed an equal amount on their tax returns to ensure no tax was payable. This was not only an administrative burden, but also caused problems for employees’ tax codes.

So before the 2016/17 year, the way to resolve this was to request a dispensation from the tax office, so that non-taxable expenses did not have to be reported at all.

Thankfully there is no longer a need to do this. Now, as long as the expenses and your business meet tax office criteria, no dispensation is needed and the expenses do not have to be reported on the P11d.

PAYE Settlement Agreements (PSAs)

This year’s Finance Bill simplifies the process for applying for and agreeing PSAs with effect from 6 April 2018. This will in future make it easier to put these agreements in place.

Date for “making good” benefits

“Making good” involves an employee making a contribution towards the benefit they receive, in order to reduce the taxable benefit. From 6 April 2017, an employee who wants to “make good” a non-payrolled benefit will have until 6 July following the tax year in order to do so.

Assets made available, without transfer of ownership

From 6 April 2017, employees will be taxed on business assets made available to them for private use on a pro rata basis. This is a welcome relief from the current situation where an employee is taxed on the basis of the asset being available to them for the whole year, even where that is not the case.

Need help with your P11ds?

If you need help with completing P11ds or simply wish to delegate this administrative burden to an experienced professional who will do the job for you, Bishop Fleming’s Payroll Team will be happy to discuss your requirements with you.

 
 
 
 
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