As we have passed the end of the 2022/2023 tax year, it’s important for employers to remember their obligation to report any employee benefits in kind that they have provided throughout the year, before 6 July 2023. This reporting is done through the completion of a P11d form and failure to complete and submit the form to HM Revenue and Customs (HMRC) can result in penalties and fines.
Employers are required to report any benefits in kind provided to their employees that are not part of their regular salary or wages. Examples of such benefits may include company cars, private healthcare, and interest-free loans. For Employee Benefits, the following are the most common benefits which need to be disclosed:
The value of these benefits must be calculated and reported to HMRC through the P11d form.
It’s important for employers to remember that, even if they have provided benefits in kind to only a few employees, they are still required to complete and submit the P11d form. The deadline for submitting the form is 6 July, following the end of the tax year.
Completing the P11d form can be a time-consuming and complex process, especially for employers with multiple employees and a wide range of benefit offerings. However, there are resources available to help employers navigate the process, including HMRC's guidance on completing the form and payroll software solutions that can automate the process.
Here's an example of a benefit in kind calculation for private medical insurance:
Let's say an employer provides their employee with private medical insurance as a benefit in kind. The annual cost of the insurance is £1,500, and the employee earns a salary of £35,000 per year.
To calculate the benefit in kind for private medical insurance, the following steps need to be taken:
The benefit in kind for private medical insurance in this example is £1,500, which would increase the employee's taxable income and result in a tax liability of £300. This additional tax liability will often be collected through Payroll by amending the employee’s tax code (and subsequently their personal allowance reducing).