While your employee salaries fall under PAYE, with responsibility for paying income tax and National Insurance, any extra staff benefits add to your company’s tax liability. By completing a P11D form, you capture all these benefits so you can inform HMRC.
Here is our essential P11D guide for recruitment agencies:
The P11D form
As mentioned, the form must show exactly what your business provides to its staff over and above their normal salary. This allows HMRC to calculate whether any extra tax or National Insurance contributions (NICs) are due from the company.
Recruitment agencies need to be aware that while P11D forms are the responsibility of employers, they also need to consider any freelancers or contractors on their books. Many of these will be paid through their own limited company, so in the eyes of HMRC they are also an employer and need to complete a P11D form.
Businesses need to remember that the annual deadline for submitting P11D forms is July 6. The form will relate to the nearest complete tax year, which will depend whether your year end is March or October.
You can download our P11D Checklist here:
There are probably lots of things you do for your staff that you don’t even consider to be benefits in kind. That’s why it is important to document everything on your company’s P11D form.
To help you, here is a list of common benefits to include:
- Company vehicles, mileage allowances and fuel
- Private car mileage allowances and fuel
- Rail season ticket loans
- Financial loans (including directors’ loans)
- Private medical insurance
- Annual social events
- Reward schemes
- Childcare vouchers
- Non-business travel or entertainment costs
- Home phone usage and company mobile phones
- Living accommodation
- Any goods or assets with a personal use.
Directors of recruitment agencies are required by law to provide HMRC with the details of any benefits. P11D forms need to be submitted for every director of employee involved, plus a P11D(b) which details the P11D forms due from your business.
Exemptions and penalties
As with any HMRC system, there are exemptions. For example, your company does not need to record any business expenses which have been paid for personally by a member of staff. These typically include business travel and business entertainment expenses, plus company credit cards.
Don’t forget to file your company’s P11D form by the July 6 deadline. Failure to submit your form will incur a fine of £100 per month per 50 employees. If your P11D contains errors, you could be fined 30%, 70% or even 100% of the owed tax. You should be okay if there are genuine mistakes, but don’t expect any sympathy from HMRC if it suspects fraudulent behaviour to avoid any tax liabilities.
Need help? Should you have any questions on your P11D form, please do get in touch.