If your company pays their employees (including company directors) any kind of benefits other than their salary, these need to be specified within the P11D form. This form needs to be sent by 6th July following the end of the relevant year. It need to go to the same tax office where your PAYE (Pay as you earn) is registered. You also need to give the completed forms to any employee receiving such benefits in kind.
Benefits in kind such as company cars including vans, medical benefits and beneficial loans are the most common benefits. As they increase the employee’s salary, National Insurance may be due for these benefits. These National Insurance contributions are payable by the company.
Company Cars
Let’s have a look at company cars in particular. How do you determine the taxable value?
We need to add a company car needs as an employee benefit if it is available for private use. If the company pays for fuel for private use, this is also a benefit in kind.
The taxable value depends on a combination of the list price of the car, its fuel type and CO2 emissions. If the car was unavailable for part of the year due to repair work, this also needs be taken into consideration.
HMRC offer an online Company Car and Car Fuel Benefit Calculator.
You don’t have to report on fuel for private use if the employee pays for the fuel or you pay for it and the employee reimburses you within the same tax year.
The same goes for company vans. You don’t have to report if the vans are used for company purposes only or used as a pool van (shared by multiple employees).
If an employee sacrifices salary in exchange for a benefit in kind, i.e. a company car, they no longer pay National Insurance and Income Tax on the sacrificed earnings. Instead income tax on the benefit in kind is due.
Medical Benefits in Kind
Some companies provide their employees with private medical insurance. This is also a benefit in kind and has to be reported on the P11D form. This is the case whether you pay directly to the provider or reimburse the employee.
Certain medical benefits are exempt. Among these exemptions are annual health checks as well as eye tests, glasses or contact lenses if health and safety regulations require them for work. For more exemptions see the guidelines of HMRC.
If you have any questions about benefits in kind, what’s taxable, what’s exempt or any other questions relating to the P11D form, please do not hesitate to get in touch. You can contact us via email admin@alba.uk.com or by phone 01509 853779.