If you provide your employees with anything other than pay, it may count as an expense or benefit. If so, you may have to report it to HM Revenue & Customs (HMRC) and pay tax and National Insurance contributions (NICs) on it.
This guide explains the basics of the expenses and benefits system. It outlines what your obligations are, introduces the key forms for reporting expenses and benefits and provides links to sources of further information on specific topics in this area.
On this page:
From April 2013 you can use an online form to:
There are links to these online forms later in this guide.
The basic rule is that if you provide an employee with anything other than pay it may count as an expense or benefit and you will need to check whether you need to report it to HMRC and pay any tax or NICs on it to HMRC.
Common examples of expenses and benefits include company cars, health insurance, travel and entertainment expenses and childcare. For step-by-step guidance on the tax and reporting requirements for these and other types of expense and benefit, follow the A to Z link below. The rest of this guide provides an overview of the rules.
Your tax, NICs and reporting obligations differ depending on the specific expenses and benefits you provide to your employees. In general, one of the following five requirements will apply in each instance:
To find out which of these requirements applies to a specific expense or benefit, follow the A to Z link at the end of this section.
The type of expense or benefit you provide isn't the only thing that affects your tax, NICs and reporting requirements. The way you provide a benefit can do so as well. For example:
Where different scenarios like these apply to an expense or benefit, details are provided in the relevant A to Z entry - follow the link below.
There are a number of different forms that you may need to use to tell HMRC about expenses and benefits you've provided to your employees. The following list provides an overview but use the links at the end of this section for more detailed guidance:
If you're required to report an expense or benefit on form P9D or P11D, make sure you use the right form. This depends on whether the employee in question is a director of your company and on their earnings (including the value of any expenses or benefits they receive). For guidance on this important point, follow the link to 'Completing forms P9D, P11D and P11D(b)' below.
Completing forms P9D, P11D and P11D(b)
Reporting company cars on form P46 (Car)
Payroll - calculating, reporting and paying employees
Employer - No Return of Class 1A National Insurance contributions
Agent - No Return of Class 1A National Insurance contributions
A dispensation is a notice from HMRC that removes the requirement to report expenses and benefits on forms P11D or P9D. Also, if an item is covered by a dispensation, it means you don't have any tax or NICs to pay on it.
You can apply to HMRC for a dispensation - using form P11DX - to cover expenses or benefits for which your employee gets a full tax deduction. This includes many routine business expenses and benefits.
Applying for a dispensation is easy and it can be done online.
A PSA is a scheme you can use to make a one-off payment to HMRC to cover the tax and NICs due on three categories of expense and benefit:
If an item is covered by a PSA you don't need to include it on forms P11D or P9D, or on your Full Payment Submission (FPS) for items that would otherwise have had to go through your payroll.
To apply, write to your HMRC office explaining that you want a PSA and describing the expenses and benefits you'd like the PSA to cover.
The value of any expenses and benefits in kind that you have payrolled must be reported on your FPS - see the guide 'What to report'. There's a link to this at the end of this guide.
You still have to send HMRC forms P11D or equivalent lists, even if you have entered into an arrangement to payroll benefits in kind and expenses. You may make yourself liable to penalties if you fail to do so.
Please follow the guidance below for submitting your P11Ds depending on which scenario applies to your circumstances.
You must:
You must:
You must:
PAYE - Employer Notification of Payrolled Benefits
PAYE - Agent Notification of Payrolled Benefits
The table below summarises the deadlines for key expenses and benefits tasks. It's important to keep to these deadlines. If you file or pay late, you'll be charged a penalty.
Task |
Deadline |
|---|---|
Notify HMRC that payrolling has taken place in that year either by:
|
At least a week in advance of any online or other electronic submission of your P11Ds |
Submit forms P11D and P9D to HMRC - you can do this online |
6 July following the end of the tax year |
Give your employees a copy of the information from their P11D or P9D |
6 July |
Submit form P11D(b) to tell us the total amount of Class 1A NICs you owe, from all your P11Ds |
6 July |
Payment of any Class 1A NICs owed on expenses or benefits you've provided |
Must reach HMRC's bank account by 22 July (19 July if you pay by cheque) |
Payment of any PAYE tax or Class 1 NICs owed on expenses or benefits you've provided |
These should be paid during the year according to your usual monthly or quarterly payment schedule |
Payment of tax and Class 1B NICs owed under a PAYE Settlement Agreement |
Must reach HMRC by 22 October (19 October if you pay by cheque) |
What happens if you don't report payroll information on time
PAYE for employers - the basics
Contact HMRC's Employer Helpline
Download 480: Expenses and benefits - a tax guide (PDF 513K)
