Mistakes made on P11D forms cannot be corrected quickly, HMRC warns: ‘Remember it’s important that you complete your forms P11D correctly the first time. If you make a mistake, it’s time-consuming to correct it and your employees will pay the wrong tax in the meantime.’

The introduction of real-time tax coding means that all employees will have to check their tax codes on a more regular basis to ensure that HMRC has not changed their tax code unexpectedly mid-month, particularly for those receiving one-off income such as dividend payments or annual bonuses or commission payments.

In the latest Employer Bulletin Issue 66, HMRC sets out some common questions and mistakes to avoid when completing P11Ds.

Who needs to file and what?

If you paid any benefits and/or non-exempt expenses, you need to file a P11D(b). Include the total benefits liable to Class 1A NICs, even if you taxed some or all of them through your employees’ pay.

Send a P11D for each employee in receipt of benefits and/or non-exempt expenses, unless you registered with HMRC online before 6 April 2016 to tax them through the payroll.

Companies that did not register online but went on to tax some or all benefits through payroll still have to send a P11D form, but HMRC tells employers to ‘mark clearly on each one, which benefits have been taxed through the payroll already.’

Although online registration is not yet compulsory, HMRC is keen for as many employers as possible to register online to payroll company benefits for the 2018-19 tax year. The benefit of registering online is that employers will no longer have to complete and submit P11Ds, as long as all benefits are payrolled.

It is important to note that employers need to get special dispensation each year if they want to opt out of the online service.

HMRC says: ‘If you are taxing benefits through the payroll and haven’t registered online to do so, you need our agreement each year to continue using this method. We normally only agree that you can do this in exceptional circumstances.’

Avoiding typical errors

Here are some common mistakes to avoid at all cost:

• do no put ‘6 April 2016’ in the start date and/or ‘5 April 2017’ in the end date for company cars, unless they are genuinely the dates your employee received or returned a company car. If your employee already had the car before the start of the tax year, leave the ‘from’ box blank. If they kept the car into the new tax year, leave the ‘to’ box blank;
• dign the form P11D(b) if you’re sending a paper one;
• only send one P11D(b) for each scheme, showing the total amount due – do not send a separate one for employees and directors, for example. HMRC treats each separate P11D(b) as an amendment to any previously received;
• check to see if you need to use the ‘adjustments’ at Section 4 before completing box C. If you do need to make an adjustment, leave box C blank; and
• if you’ve given someone a beneficial loan, complete all parts of Section H.

The HMRC Expenses and Benefits from Employment Toolkit 2016-17 Employers' end of year forms and 2017-18 record keeping is here 

HMRC webinars on expenses: there are a number of live and pre-recorded webinars being run throughout June covering expenses and benefits, and filing forms P11D and P11D(b).