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As an employer, you’re responsible for submitting a P11D form to HMRC to report any benefits in kind your employees receive in addition to their salaries. These benefits then have tax implications for both parties, so it’s important to fill the form out properly.
P11D overview
Here are the key takeaways every small business owner should know:
- You only need a P11D for benefits not taxed through payroll
- One P11D per employee + one P11D(b) per business
- Deadline to submit forms: 6 July after the tax year end
- Late or missing submissions can trigger automatic penalties
Shorts Tax Compliance Advisor and resident expert on P11D Sue Saxon provides an explanation on the key facts all employers should know about P11D.
What is a P11D?
A P11D is a form used to report any benefits employers have provided their employees. It must be submitted each year to HMRC.
The value of the benefits listed on the form enables HMRC to review an employee’s tax matters and ensure the individual is paying the correct tax. HMRC can also use the information in the P11D to update an employee’s tax code and adjust tax deductions to the correct expected overall liability for the following year.
What is a P11D form used for?
HMRC will use the P11D form to ensure that the correct PAYE and Class 1A NIC are collected. For the employee, the benefits are essentially an addition to their salary and need to be taxed, usually through PAYE by a restriction in their code number.
For the employer, the benefits give rise to Class 1A National Insurance Contribution (NIC) liability. This is calculated by a P11D benefit summary and is reported on a form P11D(b) which should accompany the P11D submission.
Why should employers care about P11D?
If an employer provides any benefits to an employee, these must be filed and returned on form P11D and P11D(b) before the deadline or penalties will be issued. These include:
- Non/late submission: £100 penalty for every 50 employees (or part 50) per month or part month
- Additional penalties and interest apply for late payments to HMRC
- The percentage of potential revenue lost according to taxpayer behaviour and level of accountability are used to calculate these charges.
Every business must be tax compliant, and submitting a P11D is an essential payroll task. For employers, P11D helps you understand the total cost of the benefits you offer your employees, which can help you make smarter decisions on benefits in the future.
For employees, P11D verifies you are paying the correct tax on non-cash benefits. It also helps you review the total package your workplace offers.
If HMRC issues a request for a P11D submission, even if no benefits are reportable that year a “nil P11D(b)” must be filed or automatic penalties will be issued.
Who needs to complete a P11D?
Any business that provides their employees with benefits that have not been put through payroll is required to complete and submit a P11D form.
Do small businesses and directors need to submit a P11D?
If a small business or director of a company provide benefits not listed on payroll, then they will need to fill out a P11D form.
Do I need a P11D if benefits are payrolled?
If all benefits are listed under payroll, then no P11D form is required. However, a business will still be required to submit a "nil P11D(b)" form.
When is the deadline for submitting a P11D?
The deadline for submitting a P11D to HMRC is 6th July following the end of the tax year. For example, the deadline for the 24/25 tax year is 6th July 2025.
P11D penalties
Failing to submit P11D forms on time can result in costly fines for business owners. Here is a breakdown of how HMRC approaches common scenarios:
Late P11D forms
HMRC can ask for a fine of up to £300 for each P11D that is sent in late. This fine must be approved by the First-tier Tax Tribunal (FTT). If the FTT agrees, HMRC can also charge £60 per day until the mistake is fixed.
Late P11D(b) forms
A P11D(b) shows how much Class 1A National Insurance the employer owes on benefits given to employees. If you send the P11D(b) late, HMRC will automatically issue a penalty.
The penalty is:
- £100 for every 50 employees (or part of 50)
- Charged for each month or part-month the return is late
Example:
Hocus Pocus Magician Accessories is a month late submitting their P11D(b) forms. They have 105 employees.
If HMRC charges £100 for every 50 employees (or number between 1 and 50) = £300 per month in penalties while the form is late.
Common benefits reported on a P11D
P11D can cover a range of benefits but these are the most common perks cited in the forms by employers:
| Category | Example |
|
Company cars and mileage |
• Company car • Company van • Fuel provided for private use |
|
Private medical insurance |
• Private dental/healthcare • Payment for private medical treatment |
|
Devices and equipment |
• Mobile phones (for personal use) • Other devices for personal use |
|
Accommodation |
• Accommodation costs for employees • Related living costs, i.e. utilities |
|
Subscriptions and development fees |
• Professional/private memberships • Training costs (not related to job) |
|
Loans |
• Employer loans over £10,000 with no or low interest applied |
|
Childcare |
• Payments or vouchers to pay or contribute towards childcare costs |
|
Travel/subsistence costs |
• Costs incurred for work-related trips • Mileage allowances • Subsistence payments made for meals |
Exempt benefits from a P11D
Several benefits are exempt from reporting on a P11D. These include:
- Employer contributions to a registered pension scheme
- Mobile phones (only one per employee)
- Car parking at or near the place of work
- Staff canteens, as long as they are available to all employees
Do you need to file a P11D if you’re self-employed?
If you are self-employed, you do not need to file a P11D form, unless you employ someone who is provided with a benefit in kind.
This is because as a sole trader or freelancer, your expenses are already included in your self-assessment tax return.
What about business expenses?
Business expenses that are ‘wholly, exclusively and necessarily’ incurred in employment, such as business travel or professional subscriptions, do not need to be included on a P11D form.
Can businesses simplify the P11D process?
Reporting benefits on a form P11D can be complex. All reporting now has to be done online either via HMRC’s own software or third-party software, which can be expensive.
Paper form P11Ds are no longer accepted by HMRC. If you have several employees with benefits in kind, completing the forms can be very time-consuming. Most accountancy firms will already have software to process and file the forms to meet HMRC’s requirements.
Upcoming changes to P11D and payroll
In April 2027, HMRC will introduce a payrolling of benefits system in phases. The current system requires businesses to report benefits after the year-end using P11D. The new approach will see taxable benefits reported through the payroll system on a monthly basis.
This change places greater responsibility on employers to calculate and deduct the correct PAYE throughout the year.
Get help with your P11D reporting
If you would like assistance with the reporting of your benefits in kind, the tax compliance team at Shorts would be happy to help. Whether you are a large or small business, Shorts can help ease the pain of processing P11Ds.
We’ll work out any calculations needed to find the assessable value of benefits or process large numbers of P11Ds efficiently, ensuring there are no errors or inconsistencies in the forms. Plus, we can advise you on payment of any Class 1A liability arising and meeting HMRC’s deadlines.
Tags: tax compliancy, P11D, P11D(b)
