Having written a number of well received blog posts on the intricacies of corporate accounting I figured that I would try and write some more. Hopefully this will help you with your filing requirements, and will also serve as a reference should I ever need to refresh my memory on a particular topic.
This one pertains to the P11D form which you must complete if "you’re an employer and need to report end-of-year expenses and benefits for employees who earned £8,500 or more". The P11D also has an accompanying form - the P11D(b) which is used "to report Class 1A National Insurance contributions due on expenses and benefits, and to declare you have sent forms P11D to HM Revenue and Customs (HMRC)."
What to report.
I find that the best way to answer this question is to simply think logically. If your employer gave you a boat, that is clearly a good thing. It is a benefit. If your employer paid you for the extra costs associated with working from home (lighting etc) then that is not a benefit - you have not gained anything, you have simply covered costs that would not have otherwise existed.
Note I initially got this wrong. As outlined here, limited companies "are more restricted in what can be claimed for use of home" (relative to self employed individuals). A limited company can not use HMRCs 'Simplified expenses' system, and as of the time of writing can only claim £18 per month for 'use of home' (without qualification). This is detailed in this manual.
If you visit this page you can view the paper version of the P11D form. It is short and gives a general overview of the items that must be declared on the form.
These include situations whereby an employer:
- provides an employee with a company car
- pays for travelling expenses
- provides health insurance
A full list of expenses and benefits can be found here. It details exactly what you need to report under specific alphabetically organised categorisations.
A more detailed and complete overview can be found in booklet 480(2016).
Some benefits are exempt from being reported (under certain circumstances). The ones that have been particularly relevant to me are:
Mobile phones - an employer can provide one mobile phone to each employee to use for private and business calls without needing to report it on the P11D
Computers - my computer is exempt from reporting because "the computer is provided for work purposes and the employee doesn’t make ‘significant’ private use of it"
Medical expenses - whilst I wasn't initially aware of this, health and safety legislation when working with computers/monitors means that my eye tests and contact lenses would be exempt from reporting.
The deadline for an employer to file P11D forms for their employees is the 6th July following the end of the tax year. For the 2015-16 tax year the forms must be submitted by the 6th July 2016.
You must pay any Class 1A National Insurance owed on expenses or benefits by the 22nd July.
Reimbursement of expenses
In my case (as a sole director of a limited company) the only expenses that I had personally incurred in relation to the company were for small incidental purchases when for whatever reason I was unable to directly purchase the product with company funds.
In these cases I accounted for the purchases as loans to the company. That is to say I credited my directors loan account for the costs of the purchases.
In relation to the P11D one does not need to report such expenses. Booklet 480 (mentioned above) states (under section 5.19) that:
"Businesses are often run in such a way that employees make payments on their employer’s behalf. For example, an employee may buy stamps,stationery and items of equipment for the employer and be reimbursed the costs incurred from petty cash or by cheque. Such transactions are not providing the employee with either earnings or expenses because the employee has received no money of his own. Accordingly such reimbursements do not feature on the P11D."
This is discussed and alluded to in this post on the Taxation.co.uk forums.
Going back to my initial explanation, there is clearly no benefit being provided when one receives a reimbursement for a £4 USB cable.
In the case of Double Negative Solutions no P11D needs to be submitted. This is because as a sole director I do not receive any benefits from the company (apart from my salary, and those that are covered by exemptions).
For larger companies the provision of cars, the annual office party, and the payment of travel expenses may be considerations.