MAKE A DATE WITH YOUR P11D

Independent chartered accountancy firm, Broomfield & Alexander, is reminding employers to mark Friday 4 July in their diaries. It isn’t an attempt to raise the profile of American Independence Day but a reminder that this is the last working day for submitting the returns of employees’ expenses – forms P11D. If you are planning to submit the forms electronically you will have a couple of extra days but you still need to get a copy of the details returned to employees by 6 July.

Steve Screech, partner at Broomfield & Alexander warns that although this seems like a long way off, you do need to plan in advance. “The P11D completion process always takes longer than you expect, so the best policy is to get organised now. Check the agreement you have with the Inland Revenue not to return certain expenses, known as a dispensation. Is it still valid and up to date? The dispensation may not cover all the expenses you pay out or all your employees. Taxable expense payments not covered by the dispensation or a Payroll Settlement Agreement must be returned on the form P11D.”

No dispensation in place? These normally run from the start of a tax year but the inspector may agree an earlier date. It may therefore not be too late to consider one for last year. Although it won’t save any tax it will cut down on paperwork and the time spent dealing with forms P11D. It will also reduce the risk of penalties arising from accidental omissions and may reduce the number of entries which employees require on their individual tax returns.

Expenses that are normally covered by the dispensation include:

• Subscriptions to professional bodies
• Business entertaining
• Business telephone calls made from home
• Travel & subsistence expenses
• Protective clothing
• Training relevant to work
• Refreshments available to staff including working lunches
• Reimbursement for goods purchased wholly for company use

All the expense amounts on the P11D must include VAT so you need to work from the original receipts, credit card bills and expense claims when completing the form. Be careful pulling information out of your accounts system, as if the VAT element has been claimed back only the net expenditure may have been recorded.

If an employee has refunded the company for private expenses, those amounts can be netted off the total reported on the P11D, but remember the employee must actually refund costs to the company, not just promise to.

Mr Screech concluded: “Remuneration by way of benefits is becoming more attractive to employees as there may be NIC savings possible. However, assessing the correct tax/NIC treatment is becoming more complicated for employers and failure to submit the correct information can result in a penalty being incurred.”

For more information about submitting P11D forms, agreeing P11D dispensations and help with reducing your tax/NIC bill, contact Broomfield & Alexander on 0800 052 1387 or visit www.broomfield.co.uk

As one of the largest independent chartered accountancy firms in Wales with more than 90 employees working from offices across South East Wales, Broomfield & Alexander has offered clients a range of business and financial planning advice since 1912.