The deadline for filing the 2016/17 Return of Benefits in kind (P11D) is 6 July 2017.
With the filing deadline almost upon us we thought it would be useful to highlight the main changes in the reporting of benefits in kind for employees that have recently come in to force.
EXISTING DISPENSATIONS HAVE BEEN ABOLISHED
- All dispensations are void from 6 April 2016 and have been replaced by “exemptions”.
- You do not need to apply for an exemption if you are paying HMRC’s benchmark rates for allowable expenses.
- If you have no exemption in place, you need to apply for one before making bespoke payments or using standard industry approved rates.
SOME EXPENSES HAVE BEEN EXEMPTED
The following expenses are now exempt from being included on the P11D forms and no dispensation is required to cover them.
- Business expenses on which the employee would previously have been able to claim tax relief which are reimbursed on a receipted basis. This would apply to most genuine business expenses.
- Business mileage paid at or below HMRC approved mileage rates :
- 45p for the first 10,000 business miles
- 25p thereon
- Subsistence paid up to the approved benchmark Scale Rates :
- £5 per day where the qualifying travel is 5 hours or more;
- £10 per day where qualifying travel is 10 hours or more,
- £25 where qualifying travel is 15 hours or more.
- Professional subscriptions
TRIVIAL BENEFITS EXEMPTION
There is now an exemption from declaration on form P11D for gifts to employees that are worth less than £50. These gifts must not be cash or a cash voucher, and they must not be work-related (e.g. contractual, or as a reward for good performance). The type of things intended to be covered are Christmas and birthday presents, flowers when sick, occasional meals etc. There is a cap of £300 per year for Directors, but no cap on the amount of trivial benefits an ordinary employee can receive in a year.
Remember though, if it is worth over £50, it is no longer trivial and the whole amount becomes taxable.
CHECKING EXPENSES – NEW STATUTORY EMPLOYER PROCEDURE
From 6 April 2016, HMRC have written into the legislation an obligation on employers to introduce a checking process with regard to payments made to employees in respect of subsistence to ensure that all such payments are properly within the scope of what HMRC view these payments as being for. This applies equally to the use of HMRC benchmark rates or some other agreed rate for which the company has a post 2016 exemption.
The extent of the checking required will depend on the size and scale of the business, but employers will need to demonstrate that someone other than the employee is responsible for ensuring that the payments are only made:
- on occasions when the employee is legitimately required to be away from home for the amounts of time specified for business purposes and
- if the employee has actually incurred an amount in respect of expenses on that occasion.
Employers will need to be able to demonstrate that the system they use checks a representative sample of their employees’ travel claims and that the checks are conducted regularly during the year on a random basis. It will therefore be necessary for employees to retain receipts even though they do not have to include these with any expense claim for an entitlement to receive an approved subsistence payment.
The deadline for payment of Class 1A NICs for 2016/17 is 19 July, or 22 July, if paid electronically, unless you have ceased trading.
If you have any questions on the new regime, or would like advice regarding forms P11d contact your local office on 0845 177 5500 or use our on-line contact form.