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May 23rd 2024

The new P11D regulations and your future digital reporting requirements

If you are an employer, you’ll need to familiarise yourself with the P11D regulation changes and prepare for the new digital reporting obligations you’ll have to maintain.

As the 6 July deadline is fast approaching, we want to give you a brief guide on what the changes to P11D entail and how they might impact your business operations.

I have also included some vital information on the P60 and how to manage your compliance with the legislation surrounding it.

Having said that, it’s vital to speak to an accountant or tax adviser about the issue because, as you’ll see, this is not an easy subject to navigate.

In short, P11D forms are used to report benefits in kind (BIKs) that employers provide to their employees, which are not put through payroll.

These benefits are considered additional to your employee's salary and can include:

  • Private healthcare
  • Living accommodation
  • Company cars
  • Certain travel expenses not deemed essential

As an employer, you must calculate and report any Class 1 National Insurance Contributions (NICs) due on these benefits as an additional P11D(b).

Your P11D reporting requirements

Employers providing taxable BIKs must ensure these are reported to HM Revenue & Customs (HMRC).

This can be achieved through two primary methods:

  • Payrolling: This method allows employers to handle BIKs and expenses through their regular payroll processes, effectively taxing these benefits alongside salaries.
  • Filing P11D forms: If benefits are not payrolled, a P11D form must be submitted for each employee receiving taxable benefits. Additionally, employers must submit a P11D(b) form to report the total Class 1A NICs due.

The final submission for a P11D and P11D(b) form is required by 6 July following the end of the tax year.

You must then ensure that any owed Class 1A National Insurance is paid by 22 July of the same year.

Failing to meet these deadlines can result in a penalty of £100 for every 50 employees for each month the forms are late, which can quickly build up to a considerable charge, if left unaddressed.

Exemptions and non-taxable benefits under P11D

Certain expenses may be exempt from reporting, provided specific conditions are met, such as reimbursing employees at the benchmark rate set by HMRC.

Exempted expenses include:

  • Business travel
  • Business entertainment
  • Business use credit cards
  • Professional fees and subscriptions
  • Uniforms

Non-taxable or 'trivial' benefits, like refreshments, a mobile phone for work, workplace parking, and certain staff events (costing less than £150 per head and open to all employees), do not require reporting either.

A note on your P60 reporting requirements

In addition to the adjustments surrounding P11D forms, it's important that you’re aware of the requirements pertaining to P60 forms.

The P60 is a summary of an employee's total pay and deductions for the tax year.

Every employer is required to issue this certificate to their employees by 31 May following the end of the tax year.

This document is crucial for your employees as it provides proof of their earnings and the taxes paid during the year, which is necessary for submitting a tax return or claiming benefits.

The key things to remember when it comes to P60 reporting are:

  • The issuance deadline: All employers must provide a P60 to each of their employees who are on their payroll during the tax year end (5 April) by the last day of May.
  • The content of the P60: The P60 must include details such as the employee's total salary for the year, the amount of National Insurance Contributions made, and the total Income Tax deducted.
  • Digital Submission: With the push towards digitalisation, many businesses are now issuing electronic P60s, which are acceptable provided they contain all the required information and employees can store and print them if needed.

As an employer, you must ensure you comply with these requirements to avoid any penalties and to ensure your employees have the necessary documentation for their personal financial needs.

As with P11D forms, adopting efficient payroll solutions or outsourcing it to an expert that can manage the process ensures the compliance and accuracy of employee tax records.

The upcoming digital reporting requirements

To simplify compliance and reduce administrative burdens, the Government is introducing mandatory digital reporting requirements in numerous areas of tax management.

As of 6 April 2026, you will be required to use payroll software to report and pay Income Tax and Class 1A National Insurance directly.

This change means you’ll either need to adopt compatible payroll systems capable of handling real-time information submission to HMRC or outsource this responsibility to a payroll specialist.

Fundamentally, you’ll need to prepare by:

  • Ensuring your payroll software meets HMRC standards for digital reporting
  • Keeping meticulous records to facilitate seamless submissions
  • Training relevant staff on the new digital processes

Although providing the P60s as digital copies is yet to be mandatory, we strongly recommend it to many of our clients to help make the process easier.

As you can imagine, it is going to be essential that you stay informed and prepare properly to prevent compliance challenges, which is why we always recommend you discuss these issues with a payroll expert.

If you’d like assistance getting to grips with these new regulations or implementing suitable payroll solutions, please speak to one of our payroll experts.
For our Kirkwall office, please call +44 (0) 1856 872983
For our Edinburgh office, please call +44 (0) 131 555 4855
Alternatively, please email enquiries@scholesca.co.uk

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