If you’re an employer, it’s important to understand the recent changes to P11D regulations and prepare for new digital reporting responsibilities as well as get ready for your P60 obligations.
With the P11D deadline (6 July) and the P60 deadline (31 May) quickly approaching, you need to know about the changes being made in this area and how they could affect your business in the future.
As Julie Goss, Payroll Manager says, “P11D forms are typically used to report benefits in kind (BIKs) that employers provide to their employees outside of payroll.
“These benefits, which are additional to an employee’s salary, can include private healthcare, living accommodation, company cars, and certain non-essential travel expenses.
“If you incorporate BIK into your payroll process automatically, you do not need to submit a P11D form, but you must still calculate and report any Class 1 National Insurance Contributions (NICs) due on these benefits through an additional P11D(b) form.
“This is a complicated subject, so if you require help with this, please speak to a qualified and experienced payroll expert.”
What does P11D reporting actually entail?
In short, if you are an employer providing taxable BIKs, you need to report these to HM Revenue & Customs (HMRC) through the two main methods:
- Payrolling: This method integrates BIKs and expenses into the regular payroll process, taxing these benefits along with salaries at the same time.
- Filing P11D forms: If benefits are not included in payroll, a P11D form must be filled out for each employee receiving taxable benefits. Additionally, employers must submit a P11D(b) form to report the total Class 1A NICs due.
All P11D and P11D(b) forms must be submitted by 6 July following the end of the tax year, and any Class 1A National Insurance owed must be paid by 22 July of the same year.
Missing these deadlines can lead to a penalty of £100 for every 50 employees for each month the forms are late, potentially leading to substantial fines.
Some expenses may, however, be exempt from reporting if they meet specific criteria, such as reimbursements at rates set by HMRC.
Exempt expenses include:
- Business travel
- Business entertainment
- Business use credit cards
- Professional fees and subscriptions
- Uniforms.
Trivial benefits, such as refreshments, work mobile phones, workplace parking, and certain staff events (costing less than £150 per head and open to all employees), do not require reporting either.
It should also be noted that employees must pay the fuel cost of any mileage incurred during the previous tax year by 1 June. If the employee fails to do this, then either:
- The benefit charge is added as a taxable amount to the next wage payment
Or
- If the benefit continues after the 1 June, a recalculation of car fuel or van fuel benefit for the current tax year needs to take place, and it is to be included as a taxable amount of benefit each payday
An employee is entitled to receive a statement by 1 June to show the year-to-date figure of any taxable benefit.
If this is not shown as a year-to-date figure on their payslip then a statement would need to be provided to the employee, or a copy of the P11d submission provided.
How to manage your P60 compliance
Along with P11D form changes, you should also be aware of the requirements for P60 forms.
The P60 is a summary of an employee’s pay and deductions for the tax year.
Every employer must issue this certificate to their employees by 31 May following the end of the tax year.
This document is essential for your employees as it provides proof of their earnings and taxes paid, necessary for tax returns or benefit claims.
Key points to remember when it comes to P60 reporting include:
- Issuance deadline: Employers must provide a P60 to each employee who was on the payroll at the end of the tax year (5 April) by the last day of May.
- P60 content: The P60 must include the employee’s total salary for the year, the amount of National Insurance Contributions made, and the total Income Tax deducted.
- Digital Submission: Many businesses now issue electronic P60s, which are valid as long as they contain all required information and are accessible to employees.
Compliance with these requirements is essential to avoid penalties and ensure your employees have the necessary documents for their financial needs.
Using efficient payroll solutions or outsourcing to a specialist can help maintain accurate and compliant tax records for your employees.
The upcoming digital reporting requirements
To reduce compliance burdens and streamline administration, the Government is introducing mandatory digital reporting requirements in various areas of tax management.
From 6 April 2026, you are required to use digital payroll software to report and pay Income Tax and Class 1A National Insurance directly for all payrolled benefits. Registration must take place before 5 April 2026 for all benefits concerned.
Currently living accommodation and beneficial loans cannot be payrolled as these both require the official rate of interest.
“To prepare, make sure your payroll software meets HMRC standards for digital reporting, keep clear records for easy submissions, and train relevant staff on the new digital processes,” says Julie.
“Although providing digital copies of P60s is not mandatory yet, we recommend using it to simplify your payroll processes.”
Staying informed and properly prepared is crucial to avoid compliance issues, so discussing these topics with a payroll expert is recommended.
If you need to discuss your payroll needs with a specialist, please reach out.
