How to File Your P11D Form
One of the few negatives of starting a business is that you’ll be responsible for all your own accounting and reporting. When you don’t have any previous experience, this can be a major headache. To most people the jargon is impossible to navigate without help; however, fail to get it right and you could find yourself subject to penalties and charges.
In this article we’re going to focus on one specific document: the P11D. This form is a document that’s used to report expenses, benefits, items and services that employees (this includes you if you are a director of a limited company) receive on top of their salary.
Do I pay NICs from benefits and expenses?
Benefits technically increase your salary; therefore, National Insurance contributions must be paid on them by the company. This includes private healthcare, interest-free loans and company cars.
Who needs to file a P11D?
A P11D is always filed by the employer. This includes you if you work as a freelancer or contractor and are technically your own employer.
When do I have to file a P11D?
Unlike a self-assessment tax return, you don’t have to file a P11D at the end of the tax year. However, it must be filed by 6th July (as of 2017).
What information do I need to include?
You must include anything that the company has paid for beyond your salary that has been used for personal use, such as company cars, health insurance, assets, self assessment fees (if paid by the company), non-business travel expenses, and entertainment.
There are certain expenses that now have exemption status and do not need to be recorded on a P11D. These include business travel expenses, business entertainment, business fees, business subscriptions, and business credit card expenses.
What are the common mistakes?
One of the most common mistakes people make is not keeping records of personal phone usage (from a home phone or personal mobile) for business purposes, when the expense has been reimbursed by an employer. If you ever conduct business activities on your own phone, make sure you keep a paper trail.
The biggest problem people tend to make is failing to keep records and data in order throughout the year. After all, the quality of a P11D is only as good as the information you have to hand. Fortunately, if you stay on top of your accounts, this will not be an issue.
How much are penalties for incorrect filing?
This all depends on the circumstances. If you don’t file your P11D HMRC will send you a reminder. However, you will only get a penalty charge if HMRC think you deserve it. They are unlikely to charge you if you can demonstrate reasonable care before the filing.
Leave no stone unturned. HMRC are very particular with regards to accounting and you must report all of your earnings. If you fail to fill out the form properly, or file it before the deadline, you will be subject to charges.
Accounting and bookkeeping isn’t easy. To ease the burden, consider hiring a professional to do it for you. Most will take on the responsibility on your behalf and, therefore, cover any charges for incorrect filing.
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