Deadline for reporting Expenses and Benefits in Kind approaches

03 July 2018

The Employer Bulletin is published six times a year and in recognition of the introduction of Optional Remuneration Arrangements (OPRA) in April 2017 both the April 2018 and the June 2018 editions have included articles on the subject of Expense and Benefits in Kind and importance of accurately completing, in full, all P11Ds.

A common error in previous years have included:

  • Entering the wrong CO2 emissions figure on the P11D
  • Not including accessories
  • Incorrectly recording capital contributions and private use payments

Where the P11D is incomplete or includes obvious errors HMRC will contact the employer to amend and re-submit an amended P11D in each case.

HMRC have also looked to highlight the impact on this years P11Ds for employers who are affected by the introduction of new rules impacting OPRA.

“Benefits in Kind with Cash Allowances, Flexible Benefit Packages and Salary Sacrifice

Do you offer your employees cash allowances, flexible benefit packages with a cash option or salary sacrifice in return for a Benefit in Kind (BiK)?

If so, the rules for these types of BiKs changed on 6 April 2017. 

  1. All BiKs are now valued at the higher of the cash given up or the value under the traditional rules
  2. All previously non-taxable BiKs are now taxable, valued on the cash given up
  3. Cars with emissions of 75g CO2 /km or less, pensions, pension advice, childcare and Cycle to Work are unaffected

Arrangements entered into on or before 5 April 2017 kept their previous tax treatment until the earlier of a renewal or variation of the arrangement. All pre-6 April 2017 BiKs moved into the new rules on 6 April 2018.

However, pre 6-April 2017 cars and accommodation move into the new rules on the earlier of renewal or variation or April 2021. Pre-6 April 2017 school fees have special rules, but all move into the new rules from April 2021.

P11Ds for 2017-18 On your P11Ds you need to report the correct taxable figure. You may have an employee who is in the traditional rules and then moves into the new rules mid-year. If so, then you can report it either as two separate BiKs or a combined figure.

For example, an employee has medical benefit which costs you £150, salary sacrifices £200 a year, started to receive it in January 2017 and renews the arrangement in January 2018. You can either:

  1. Report the first benefit £112.50 (£150 time apportioned up to 1 January), and report a second benefit of £50 (£200 time apportioned from 1 January).
  2. Report a single benefit worth £162.50 (combining the two values).

P11Ds and cars 

When completing the P11Ds you need to correctly complete all of the fields for cars. If you don’t do this:

  1. You will pay the wrong amount of National Insurance Contributions
  2. Your employees will pay the wrong tax
  3. You will need to send us an amended P11D in each case.”

Class 1A NICs

In addition to P11D completion employers also need to submit a P11D(b) that confirms Class 1A National Insurance contributions (NICs) owing for the tax year ending 5 April 2018 by 6 July 2018 at the latest.

Class 1A National Insurance payments must reach HMRC by 22 July (19 July if payment is made by cheque).

CIPP comment

A number of calls to the Advisory Service suggest that there remains confusion as to whether there is a need to complete the car details on the P11D where the ‘cash foregone’ or ‘relevant amount’ applies as a result of entering in to Optional Remuneration Arrangements. HMRC have confirmed that full and accurate car details are needed in this instance and if omitted the employer will be contacted to resubmit the P11D in full – which risks the employer missing the 6 July deadline.