The rules governing expenses and benefits can be lengthy and complicated – and with tax rates on the increase, particularly National Insurance, and HMRC penalties for mistakes and omissions also increasing, it is more important than ever to review what you are doing and plan ahead.
Form P11D and P9D guidance
All businesses are required to file an annual P11D Return, including a declaration if no benefits were provided. There are penalties for failing to submit a P11D, as well as for incomplete or incorrect forms. Omitted benefits-in-kind are the most common type of failure discovered by HMRC during an Employer Compliance Review.
With regard to Forms P11D and P9D , which detail expenses and benefits provided to employees and directors, the maximum penalty for submission after the 6 July deadline is £300 plus a further £60 per day per form, once the initial penalty has been imposed, for as long as the forms remain outstanding. Employers must also provide copies of the forms to all relevant employees by 6 July, whether or not they continue to be employed. Any delay in providing this information to employees or former employees will result in fines at the same rates.
If Forms P11D and P9D are incorrectly completed, there is a penalty of up to £3,000 per form. The P11D(b) is required to include details of Class 1A NIC payable and it must be submitted to HMRC by 6 July after the relevant tax year. If not submitted by 19 July, a penalty may be charged of up to £1,200 (£100 per month, or part month, late) per 50 employees (or part thereof).
In view of the severe penalties in place for the submission of incorrect Forms P11D and P9D, it is essential that all relevant benefits are identified and properly included.
Our team of tax specialists can guide you through the process, ensuring you supply both correct and timely information to HMRC.
Salary Sacrifice – Save Income Tax and National Insurance!
Salary sacrifice schemes can save National Insurance contributions (NIC) for employers and both Income Tax and NIC for employees. It can also help retain key employees with a generous flexible benefits scheme.
The principle is that an employee gives up an element of taxable pay, instead receiving a valuable benefit-in-kind that is not liable to tax or NIC. Benefits could include a mobile phone (including smartphones), childcare vouchers, parking spaces, bicycles and bus passes (if available to all employees), pension contributions or a range of other options.
Smailes Goldie can help you set up a salary sacrifice scheme for your business while our payroll bureau, SG Outsourcing can assist in the administration of the scheme.