Benefits In Kind Return
Following the end of the fiscal year 2018/2019 on the 5thApril 2019, employers and their payroll department will be turning their attention to the necessary filings of the year end returns for disclosing payroll and benefits in kind that have been provided to their employees in the fiscal year.
My colleague, Kim, has already been through the payroll returns but in the case of benefits in kind the form that needs completing is the P11d (b) and P11d forms to go to HMRC by the 6thJuly. Copies of the P11d form also need to be provided to the employees in order for them to complete their personal tax returns or get changes in the notices of coding as HMRC will assume such benefits continue into the new 2019/20 tax year.
Employers need to be able to distinguish between those taxable benefits and non-taxable benefits and only report the former to HMRC. Taxable benefits most commonly provided are company cars and private medical insurance.
However, directors and employees who borrow money or are lent money from the company interest free or below market rate of interest may have a taxable benefit to report, comprising the interest saving, although there is relief for small loans of less than £10,000. In the case of a director’s overdrawn loan account, the exemption only applies if the amount never exceeds the exempt amount in the year.
Common non-taxable benefits include pension contributions paid by the employer and a host of benefits normally provided by mainly larger employers including cheap or free canteen meals and in-house sports facilities.
My message is therefore for employers to preferably have a system in place throughout the year to gather and collect information on benefits in kind that they provide to their employees and directors rather than leave it until after the fiscal year when, although it seems a long time (3 months) to get the returns in, that time rapidly passes and sometime more frantic attempts are made to provide information nearer the deadline date. Of course HMRC have penalties for missing the deadline or misreporting the benefits.
Employers ought to be well aware that following the submission of the P11d (b) form returning the total benefits provided to their employees, they will have to account for Class 1A national insurance contributions by the 19thJuly or, if they pay online, by the 22ndJuly. The amount is 13.8% of the total benefits provided.
If you need any help and assistance in calculating the benefits in kind to be reported to HMRC, please do not hesitate to contact us.