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.
On this page:
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.
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
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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 HM Revenue and Customs (HMRC)
those Class 1A NICs
- declare to HMRC 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 HMRC 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
Download a guide to Class
1A NICs (PDF 272K)
Read More about expenses and
benefits
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
HMRC know using form P46 (Car).
However, from April 2011 you may submit replacement car information, but this must be submitted online
Read more about Reporting
company cars on form P46 (Car)
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