It’s essential that you keep records of any expenses and benefits you provide to your employees. You’ll need these records to make sure that your forms P11D, P9D and P11D(b) are accurate at the end of the tax year, and to ensure that you and your employees pay the correct amount of tax and National Insurance contributions (NICs).
You also need to retain these records in case HM Revenue & Customs (HMRC) ask to see supporting paperwork if they have any questions about how you’ve accounted for the expenses and benefits you’ve provided to your employees.
On this page:
Your records must enable you to demonstrate that your end of year expenses and benefits returns – on forms P11D, P9D and P11D(b) – are accurate.
You should record the date and details of every benefit and expenses payment you provide, and retain any documentation relating to them. The specific information you need to record and keep will differ depending on the type of expense or benefit you have provided. A good rule of thumb is that you should retain any information required to work out the reportable value that goes on your employee’s form P11D or P9D at the end of the year.
For example, if you reimburse an employee’s travel expenses you’ll need to keep a record of when and why the travel costs were incurred, and where possible retain receipts from the employee to confirm the costs you’re reimbursing. Or if you provide an employee with a company car, your records will need to confirm the wide range of details that affect a car’s reportable value, such as its make, model, age, list price and fuel type.
You must also keep a record of any payments made by your employees to contribute to the cost of expenses and benefits that you provide to them.
For information on a wide range of expenses and benefits, follow the link below to HMRC’s expenses and benefits A to Z.
You should keep your expenses and benefits records for three complete tax years after the end of the tax year to which they relate.
It makes sense to keep your records on an employee by employee basis, because that’s the way most of your expenses and benefits end-of-year forms – P11D and P9D – are filed. And if PAYE tax or Class 1 NICs are payable on any of the expenses or benefits you provide, then it’s a requirement to record them on form P11 if you keep one for the employee (see the subsection below).
You may need to consult your expenses and benefits records for an employee before deciding whether to use form P11D or P9D for them at the end of the tax year. The rules differ for directors, but for your other employees you should use:
The £8,500 threshold includes the value of expenses and benefits you provide to the employee, as well as their other earnings, so you may need to have these figures to hand before knowing which form to use for an employee.
While most expenses and benefits are recorded on form P11D or P9D at the end of the year, some must be recorded during the tax year on a form P11 or equivalent payroll record (either electronic or paper). You include these expenses and benefits in the employee’s gross pay when calculating PAYE tax and/or Class 1 NICs through your payroll.
You must prepare and maintain a P11 or equivalent payroll record for any employee who earns above a certain level or for whom you’re required to operate a tax code – for more information use the links at the end of this section.
Form P11D(b) isn’t completed on an employee by employee basis. You use it to declare the total Class 1A National Insurance contributions (NICs) that you owe in respect of all your employees. There are no specific records to keep in support of your P11D(b), other than the forms P11D you’ve used to record individual employees’ expenses and benefits.
More about forms P11D and P9D and the £8,500 threshold
More about completing form P11
Use HMRC’s A to Z to find out which expenses and benefits to report on forms P11, P11D and P9D
As well as retaining your own records, including receipts and other records provided by your employees, make sure to keep any documents or correspondence relating to expenses and benefits that HMRC sends you.
This is particularly important if you apply to have any expenses and benefits covered by a dispensation or PAYE Settlement Agreement (PSA). Key documents HMRC might send you include:
How to reduce expenses and benefits reporting with a dispensation
You can get further help and advice from HMRC’s Employer Helpline.
