A P11D is the form UK employers use to report benefits in kind (BIKs) and reimbursed expenses provided to employees and directors to HMRC. Benefits in kind are non-cash items or perks that have a monetary value, and most are subject to income tax and employer National Insurance contributions.
What Must Be Reported on a P11D
Any taxable benefit or expense payment that has not been payrolled or covered by a dispensation must be reported. Common items include:
Company Cars and Fuel
| Item | What to Report |
|---|---|
| Company car | List price, CO2 emissions, fuel type, dates available, capital contributions |
| Car fuel | Whether employer paid for any private fuel |
| Company van | Whether available for private use |
| Van fuel | Whether employer paid for private fuel |
Financial Benefits
- Beneficial loans — loans above £10,000 at below the official rate of interest, which HM Treasury sets and can review during the tax year
- Relocation expenses — amounts above the £8,000 tax-free threshold
- Credit cards and charge cards — private expenditure paid by the employer
Insurance and Medical
- Private medical insurance — premiums paid by the employer
- Income protection insurance — employer-paid premiums
- Life insurance — only if not through a registered group life scheme
Assets and Accommodation
- Assets provided for private use — e.g. computers, furniture, equipment
- Assets transferred to the employee — at less than market value
- Living accommodation — provided by the employer (unless exemptions apply)
Other Benefits
- Subscriptions and memberships — unless on the HMRC approved list for the employee’s profession
- Entertainment expenses — if not wholly business-related
- Travel and subsistence — any amounts exceeding benchmark rates or not covered by a scale rate approval
- Telephone — a second or additional mobile phone (first phone is tax-free)
What Does Not Need to Be Reported
Certain benefits are exempt from P11D reporting:
- Employer pension contributions to registered schemes
- One mobile phone per employee
- Workplace parking
- Trivial benefits costing £50 or less per occasion
- Annual staff parties up to £150 per head
- Cycle to work equipment under an approved scheme
- Eye tests and corrective glasses for VDU users
- Canteen or workplace meals available to all staff
- Benefits that are being payrolled through PAYE
P11D Deadlines
| Deadline | Requirement |
|---|---|
| 6 July | Submit P11D and P11D(b) to HMRC |
| 6 July | Provide a copy of P11D to each affected employee |
| 22 July (electronic) or 19 July (cheque) | Pay Class 1A NICs to HMRC |
These deadlines apply to the tax year ending the previous 5 April, so the filing and payment dates fall in the following July.
P11D(b) — Declaration of Class 1A NICs
Alongside the individual P11D forms, the employer must submit a P11D(b) form. This is a summary declaration showing the total Class 1A National Insurance contributions owed on all benefits in kind.
Class 1A NIC is charged at the employer (secondary) Class 1 rate on the total taxable value of all benefits reported on P11Ds (and any payrolled benefits).
Example Calculation
If an employer provides the following benefits to their workforce, with an illustrative Class 1A rate of 15%:
| Benefit | Total Taxable Value |
|---|---|
| Company cars | £45,000 |
| Private medical insurance | £12,000 |
| Beneficial loans | £3,000 |
| Total | £60,000 |
The Class 1A NIC liability would be: £60,000 × 15% = £9,000
How P11D Values Are Calculated
Each type of benefit has specific HMRC rules for calculating the taxable value:
Company Cars
The benefit value is calculated as:
List price × BIK percentage (based on CO2 emissions)
The BIK percentage is lowest for pure electric cars, depends on electric range for plug-in hybrids and rises with CO2 emissions up to a maximum. HM Treasury sets the bands for each tax year; see company car tax for the details.
If the car is only available for part of the year, the benefit is pro-rated for the number of days available.
Beneficial Loans
For loans of £10,000 or more, the benefit is calculated as:
Outstanding loan balance × applicable official rate of interest − any interest actually paid by the employee
The calculation can use the average method (average of opening and closing balances) or the precise method (exact daily balances).
Private Medical Insurance
The taxable value is simply the cost to the employer of providing the cover — the premium paid.
Assets Provided for Use
The annual taxable value is 20% of the market value of the asset when first provided, plus any additional costs the employer incurs.
Payrolling Benefits as an Alternative
Since April 2016, employers can elect to payroll benefits instead of reporting them on P11Ds. This means the taxable value is added to the employee’s gross pay each period and tax is deducted through PAYE in real time.
Advantages of Payrolling
- Real-time tax collection — no end-of-year adjustments needed
- No P11D required for payrolled benefits
- Transparency — employees see the benefit value on their payslip
- Simplified year-end — fewer forms to complete
How to Set Up Payrolling
- Register with HMRC before the start of the tax year via the online payrolling benefits service
- Choose which benefits to payroll (can be selective — some payrolled, others on P11D)
- Calculate the monthly benefit value and add to each employee’s taxable pay
- Report through RTI as part of the normal FPS
Even when payrolling, the employer must still submit a P11D(b) to declare Class 1A NICs on all benefits, whether payrolled or not.
How P11D Affects the Employee’s Tax
When a P11D is submitted to HMRC, the benefit values are used to adjust the employee’s tax code for the following year. HMRC collects the tax by:
- Calculating the total taxable benefit value
- Reducing the employee’s tax-free allowance by that amount
- Issuing a new tax code to the employer
- Tax is then collected in instalments through the following year’s PAYE
For example, if an employee with a tax-free allowance of £12,000 (code 1200L) has a company car with a BIK value of £6,000, their code might change to 600L, reducing the annual tax-free allowance to £6,000.
P11D and Directors
Directors are treated the same as employees for P11D purposes, but certain additional considerations apply:
- Directors of close companies (broadly, companies controlled by 5 or fewer shareholders) may have additional reporting requirements
- Beneficial loans to directors are always reportable regardless of amount if the director is a participator in a close company
- Living accommodation rules have specific conditions for directors
Record Keeping
Employers must keep P11D records for at least 3 years after the end of the tax year. Records should include:
- Details of each benefit provided to each employee
- Calculations showing how the taxable value was determined
- Supporting documents (invoices, insurance policies, car details)
- Copies of P11D and P11D(b) forms submitted
Penalties for Late or Incorrect P11D Filing
| Offence | Penalty |
|---|---|
| Late P11D submission | £300 per form, plus up to £60 per day after an initial penalty notice |
| Incorrect P11D | Up to 100% of the tax lost, depending on the reason (careless vs deliberate) |
| Late payment of Class 1A NICs | Interest charged plus late payment penalties |
| Failure to provide P11D to employee | Up to £300 per form |
P11D and Other Payroll Documents
The P11D works alongside other payroll documents:
| Document | Relationship to P11D |
|---|---|
| P60 | Shows pay and tax from salary; P11D adds benefits |
| P45 | Issued to leavers; P11D still required for benefits provided during employment |
| Payslip | Shows payrolled benefits in real time; P11D covers non-payrolled benefits |
| RTI FPS | Reports salary and payrolled benefits; P11D reports remaining benefits |
P11D and Accounting
The benefits reported on P11Ds represent real costs in the employer’s accounting records:
| Entry | Account | Timing |
|---|---|---|
| Benefit cost | Debit: employee benefit expense | When incurred or accrued |
| Class 1A NIC | Debit: employer NIC expense | Accrued monthly, paid by July |
| Class 1A NIC payment | Credit: bank | When paid to HMRC |
The total cost of benefits, including the Class 1A NICs, should be factored into employment cost budgets and workforce planning alongside salary and pension costs.