What are taxable benefits and how do I report them? - Ad Valorem
5 minutes
We are in the process of sending out our annual P11D checklists summaries to our clients to gather information about any taxable benefits that may have been provided over the 2019/20 tax year.
What are taxable benefits?
If you provide certain benefits to any company employees or directors then they may generate a taxable benefit that need to be reported to HMRC.
Below are some examples of taxable benefits:
| Ø Business Mileage – if paid above HMRC approved rates
Ø Company Cars & Vans Ø Interest free loan Ø Private medical / Dental insurance Ø Assets provided for personal use Ø Personal payments – e.g. school fees, gym membership, home phone charges |
Ø Company credit cards provided for personal use Ø Living Accommodation Ø Relocation Expenses Ø Trivial benefits – there are different limits for employees and Directors Ø Shares at less than Market Value Ø Mobile Phones
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Business Mileage
If the company pays mileage for business use of a personal car ABOVE 45p per mile for the first 10,000 miles and 25p thereafter please provide details of the number of miles paid and the rate applied for each employee.
Company Cars
If company cars have been made available to employees or a member of their family to use privately, please let us know and we will request further details
Company Vans
If the company provided a van to employees or a member of their family to use privately and paid for the fuel.
Please note that personal use does not include:
- Home to site trips that are exclusively for business (including very small detours such as to buy a newspaper)
- Very few small, local personal trips such as to take a mattress to the tip (limited to no more than 2 per year)
Interest Free Loan
If an employee has been provided with a loan which exceeds £10,000 in the year then please let us know and we will request further details.
Assets provided for personal use
If employees are provided with assets which they can use for personal use (which are not listed elsewhere in this blog) please let us know and we will request further details.
This includes furniture provided in company accommodation.
Please note that this does not include:
- The use of an asset where private use is not significant
- 1 mobile phone per employee that is in the company name
Living Accommodation
If employees have been provided with living accommodation that is owned or rented by the company please let us know and we will request further details.
Relocation Expenses
If any expenses have been paid by the company for the relocation of an employee above £8,000 then please provide details of the amounts paid for each employee.
Mobile Phones
As above 1 mobile phone provided per employee that is in the company name is not a taxable benefit.
If you reimburse any calls that have been made on an employees personal mobile phone then this is a taxable benefit and we will need details of the amounts paid for each employee.
Trivial Benefits
There is a statutory exemption for ‘trivial benefits’ given to an employee.
A trivial benefit is one that:
- Costs £50 or less to provide (including VAT)
- If it is a retail store voucher that is not convertible into cash
- Isn’t a reward for service e.g. Birthday, Christmas, Wedding anniversary etc.
- Isn’t in the terms of the employee’s contract
- Is not reimbursed
There is no limit on the number of trivial benefits that can be provided in the tax year for an employee.
Where the individual is a director of a close company the total value of trivial benefits cannot exceed £300 per annum.
Examples of common trivial benefits are:
| Ø Christmas Hampers
Ø Fireworks Ø Vouchers for high street stores Ø Tickets to the theatre Ø Tickets to a football game Ø Wedding Anniversary champagne |
How are these benefits reported?
Details of these benefits have to be entered into a software which will generate forms P11D & P11D(b).
A P11D is generated for each employee and needs to be distributed to each individual by the employer by 6th July 2020, the amount that is reported will be included in the employees’ tax code which will be updated once HMRC have received the submission.
A P11D(b) is generated for each company which reports the total taxable benefits from all employees. This has to be submitted to HMRC by 6th July 2020. There will be Class 1A NIC due on this amount which is calculated at 13.8%. This is payable by the employer and must be paid by 19th July 2020 (if payment is made via cheque) or by 22nd July 2020 if payment is being made electronically.
If you have provided any of the above items or have any queries then please contact us and we will be able to inform you whether anything needs to be reported to HMRC.
(E) enquiries@advaloremgroup.uk or (T) 01908 219100
