Employee gets a new benefit in kind
If you provide an employee with a non-cash benefit, such as a company car or private medical insurance, you may have additional reporting requirements to fulfil, as well as Class 1A National Insurance contributions (NICs) to pay.
The steps you must take
This guide provides a brief outline of the steps involved in accounting for taxable benefits you provide to your employees. However, you'll find a link to more detailed information about expenses and benefits at the bottom of this guide.
Identify which benefits are taxable
Not all benefits are taxable, and some taxable benefits are treated differently from others:
- some benefits, such as living accommodation, are taxable whenever they are provided to an employee
- other benefits, such as cars and medical insurance, are taxable only if they are provided to employees earning £8,500 a year or more, or to company directors (regardless of earnings)
- non-taxable benefits include drinks and refreshments at work
Record the taxable benefits and pay Class 1A NICs on them
If you provide a taxable benefit to an employee you must take the following actions:
- calculate the cash equivalent value of the benefit
- record the value of the benefit on a form P11D Expenses and Benefits if it is provided to a company director or to an employee earning £8,500 or more
- submit a form P9D if you provide a benefit to an employee whose earnings are less than £8,500 (including the value of any expenses or benefits provided to them)
- if you have had to record any Class 1A NICs on an employee's form P11D, you will have to pay us those Class 1A NICs
- declare to us the total Class 1A NICs you need to pay for the year on form P11D(b)
- provide employees with a copy of their P11D or P9D
- send us all forms P11D, P9D and P11D(b) by 6 July following the end of the tax year to which the forms relate - you can file them online
If you provide or change an employee's company car
If you provide an employee with a company car for the first time, or if you change an employee's company car, you must let us know using form P46 (Car).
More useful links
More about expenses and benefits
