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Payroll Year End and P11D Benefits in Kind

Date posted: February 26, 2016

With spring just around the corner we at Riley & Co are turning our attention to the ‘end of the tax year’ duties.

Two of the most important of these are the payroll year end and the declaration of P11D and P9D forms to declare benefits in kind.

Benefits in Kind – the basics

The important question to ask yourself is “Do we, the employer, pay for anything which the employee enjoys for personal use?”

If the answer is yes then you probably need to complete a benefit in kind declaration and tell HMRC, and your employee, so that any tax and national insurance due can be collected.

The most common benefits in kind include:

  • Company car and/or payment of private fuel costs
  • Private Health Cover
  • Overdrawn Directors Loan account or low interest loans to employees
  • Personal Tax Bill or Accountancy costs paid for on behalf of the employer

This of course is not an exhaustive list.  There are far more examples in the HMRC A-Z list of expenses and benefits here; Anything which is already dealt with through a payroll scheme like a bonus, is not relevant for this exercise.

Benefits in Kind – further considerations

Have you made a declaration with your payroll year end?

It used to be the case that when you did your payroll year end you could make a declaration regarding benefits in kind to say ‘Are not due’ or ‘Will be sent later’. With the introduction of RTI (Real Time Information), these are no longer legally required but some software providers have chosen to keep them anyway.

Therefore, if you have declared that they ‘Will be sent later’ as part of the year end submission you MUST do a P11D declaration even if it is nil. If you do not send one at all there will likely be a financial penalty levied which will increase until one is submitted.

Equally, if HMRC send you a P11D notification to complete you must do so unless you are able to declare ‘Are not due’ with your final payroll submission.

We, at Riley & Co are contacting our clients in the next few weeks to discuss these matters and also the new dividend rules including strategies for tax efficient withdrawals from companies. We provide this as a service to all clients affected. If you feel like we can help you and your company please call us on 01422 341019 or email us at