Date posted: 12th May 2021
Employers who provided taxable benefits to employees during the 2020/21 tax year will need to report these to HMRC, on forms P11D by 6 July 2021. This is unless the benefit has been taxed via the payroll or is included within a PAYE Settlement Agreement.
Such benefits could include medical insurance, gym memberships, golf club subscriptions, interest free or low interest loans or company cars. There are many more benefits too!
Where taxable benefits have been provided, the employer must also file a P11D(b) by 6 July 2021. This is the employer’s declaration that all required P11Ds have been filed and also the declaration of the Class 1A national insurance payable by 19 July 2021.
The tax legislation does contain a number of exemptions which remove a charge to tax.
These may be specific to a particular benefit, such as those for employer provided mobile phones or workplace parking. Alternatively it may be more general, such as the exemption for paid and reimbursed expenses, which applies if the employee would have been entitled to a tax deduction had they met the expense directly.
There are also a number of temporary Covid-19 specific exemptions that apply for the 2020/21 tax year. These include the provision or reimbursement of Covid-19 antigen tests and reimbursed homeworking equipment (such as a computer) to enable the employee to work at home during the pandemic if the equipment would be exempt if made available by the employer.
Remember, exemptions are only available if the associated conditions are met. In addition, care must be taken here where provision is made under a salary sacrifice arrangement and the alternative valuation rules apply as this may negate the exemption.
The amount on which the employee is taxed is usually the cash equivalent value. This is calculated in accordance with the benefit-specific rules where these exist, as is the case for company cars, vans, living accommodation and employment-related loans. Where there is not a benefit-specific rule, the cash equivalent is determined in accordance with the general rule – the cost to the employer, less any amount made good by the employee. Amounts made good are only deducted where the employee makes good by 6 July 2021.
If the benefit is provided under an optional remuneration arrangement, such as a salary sacrifice arrangement, the alternative valuation rules are used to calculate the taxable amount, unless the benefit is one which is specifically excluded from the ambit of those rules – such as childcare vouchers, pension provision and advice, employer-provided cycles and low-emission cars (carbon dioxide emissions of 75g/km or less) or within the transitional rules for 2020/21.
If you need assistance with the completion of forms P11D, please give us a call or contact us here.