Self Assessment – expenses and benefits (480: Appendix 10)
Find out about expenses for a spouse accompanying an employee on business trips.
Overview
This appendix contains:
- information about form P11D
- some additional tips for employers
Tips have been taken from material previously published in booklets issued to larger employers who provide benefits in kind and expenses payments.
Forms and working sheets
Forms P11D and P11D(b) and the P11D Guide are updated each year.
In addition, optional working sheets are available:
Optional working sheets for employers to calculate the cash equivalent of the following benefits – the sheets are numbered as follows:
| 1 | Living accommodation |
| 2 | Car benefit and car fuel benefit |
| 2b | Car benefit and car fuel benefit provided via optional remuneration arrangements |
| 3 | Vans available for private use |
| 4 | Interest-free and low interest loans |
| 5 | Relocation expenses payments and benefits |
| 6 | Mileage allowance payments |
Working sheets are given to help employers calculate the cash equivalent value of a benefit that should be returned on a P11D. The use of a working sheet is optional. Completed working sheets should be kept by the employer to help answer any questions from the employee, or from HMRC.
You must not send working sheets with your P11D returns. It may also be useful when preparing forms P11D for the following year.
For employers who are registered to payroll benefits, the working sheets can be used to confirm the cash equivalent or relevant amount before calculating the relevant amount to add to pay in the pay period.
Form P11D contains details of official rates of interest and average official rates of interest for the year. This information is needed to calculate the benefit arising from interest-free and low interest loans. Form P11D is usually available in the March before the tax year ends.
Substitute forms and lists
The Self Assessment tax return was changed in April 2008 and the order of the boxes on the P11D no longer matches the order of boxes on the Self Assessment tax return.
However the P11D does still carry the same box numbers 9 to 16, alongside benefit or expense figures. We suggest that employers who supply P11D information on substitute forms or lists use the same order as on the P11D and use the same box numbers.
If P11D information is presented to HMRC and employees in this way:
- the same format will meet both obligations
- it’ll be easier for employees to complete their tax return correctly, if they get one
- it’ll reduce the number of questions from employees to employers and HMRC
- it’ll help HMRC to process P11D information more quickly and efficiently
This does not mean that HMRC will not agree substitute forms or lists which are not ordered in this way. We recognise that such a change could be costly or inconvenient for some employers.
Employers who are seeking approval to use substitute P11Ds which are copies, or very near copies of the official form or have already been given approval to use substitute forms or lists and want to make changes, can contact Employer: general enquiries.
How to get form P11D
You should download forms P11D, P11D Working Sheets, and P11D(b) from the links on the expenses and benefits page.
If you cannot download these forms, you can contact the employer orderline to place an order for any of the forms required.
The form P11D, which contains details of official rates of interest, is available online or from the orderline from the end of March in the year this guide was published.
Electronic filing of expenses and benefits
Employers can use any of the following to report expenses and benefits electronically:
- commercial payroll software
- HMRC’s PAYE Online for Employers
- HMRC’s Online End of Year Expenses and Benefits services
How to find out more
Find out more information about the electronic and online services.
Tips for employers
The tips given here are of particular interest to employers who give benefits in kind and expenses.
Some clear messages are that you should:
- look at all the expenses and benefits you give to see whether you’re following the proper procedures, for example, for either operating PAYE or for reporting details, or both, to HMRC (P11D details, and so on)
- if in doubt about whether something is a benefit, get reliable advice - look in this tax guide or contact the employer helpline
- consider what items might be suitable for a PAYE Settlement Agreement (PSA)
Tips on completing P11Ds
The tips for completing the P11Ds will make sure that they do not need to be returned to you for correction before they can be actioned. Pay attention to the following:
- the entries on the return must be clear and legible
- the font size should be not less than Arial 11
- use the employee’s National Insurance number, or the date of birth and gender to allow HMRC to locate the employee or director
-
when completing car details:
- an electronic car (fuel type E) does not have CO2 emissions
- the Dates car available from box should only be completed when the car was first provided in that tax year
- the Dates car available to box should only be completed when the car was withdrawn in that tax year. Do not enter 5 April unless the car was withdrawn from the employee or director on 5 April
-
when completing interest-free and low interest loans details:
- the Dates loan was made box should only be completed when the loan was first given in that tax year
- the Dates loan was discharged box should only be completed when the loan was discharged in that tax year. Do not enter 5 April unless the loan was discharged on 5 April
Exempt expenses and PAYE Settlement Agreements (PSAs)
There’s no obligation on employers to tell employees about exemptions, and PSAs which affect them. But without it they might not understand why something was not shown on their P11D details (or why they did not get a form P11D at all), and might raise a query with their payroll office.
There’s no ideal way to give the information to the employees involved. This depends on what was included in the PSA, which and how many employees received the item, and so on.
Alternative suggestions are:
- publish full details of all the exemptions or PSA items and give enough information so employees can identify which items apply to them (for example, in any in-house magazine or staff manual)
- give each member of staff with a private notice of the items which apply to them
This could be done:
- with the form P11D
- when starting their job or when the exemption or PSA was first applied
Details of expenses and benefits in kind for employees
Employers must give details of expenses and benefits in kind (‘P11D details’) and Mileage Allowance Payments in excess of the exempt AMAPs (Approved Mileage Allowance Payments) amount (see chapter 16) to relevant employees.
They can do this by:
- photocopying forms P11D and other information sent to HMRC
- copying an approved substitute P11D which they use for their return to HMRC
- designing their own format
For employers registered to payroll benefits, details could be on a payslip or statement after the final payment of wages.
Substitute forms
There’s no need for employers to agree with HMRC the format of P11D (and other) information given to employees.
The tips which follow are for employers who want to design their own form, probably produced by a computer system. We assume the aim is to give employees all their information about expenses and benefits in one go, probably on one sheet of paper.
We suggest you start from the official form P11D as this shows the details you need to give to employees for each item of expenses and benefits.
You do not have to give employees ‘nil’ details of items which they do not get. This means that for most employees your form can be much shorter than the official form and this can free up space (on an A4 sheet) to include explanatory text or cross reference to guidance elsewhere (for example, in the staff manual).
A strong recommendation is that you include a message on the form saying keep it for tax record purposes. We also strongly recommend that you include on your form the tax return box numbers which are shown on the official P11D for each item, and explain this to staff. The official P11D gives some wording you could lift for these purposes.
More information
If you’ve questions contact the Employer Helpline.