2022/23 P11D Forms to be submitted online

The deadline for filing the P11D forms to report benefits in kind in respect of directors and employees, for the 2022/23, tax year is 6 July 2023.  Do note, however, that the original and amended reports must now be made online and paper returns will be rejected.

Forms P11D and P11D(b) returns must be submitted online through one of the following:

• PAYE Online for Employers
• PAYE Online for Agents
• payroll software that is recognised by HMRC

For employers or agents who need to submit up to 500 P11D and P11D(b) returns, the free HMRC PAYE online services can be used. For anything more, 3rd party software is required.

Remember that ‘trivial’ benefits in kind provided to employees and directors do not need to be reported on form P11D.  ‘Trivial’ benefits are those that:

• cost the employer £50 or less to provide;
• are not cash or a cash voucher;
• are not a reward for work or performance; and
• the employee is not contractually entitled to.

PAYE settlement agreements also online

Where benefits in kind are provided to employees, that will usually result in an income tax charge on the employee and a Class 1A national insurance (NI) charge on the employer. The rate to be used for the 2022/23 tax year is 14.53%, being a hybrid rate due of the withdrawal of the 1.25% Health and Social Care levy part way through the year.

The income tax charge on the employee can be avoided by the employer entering into a PAYE settlement agreement (PSA) with HMRC, whereby the employer pays the income tax on the employee’s behalf. Not all benefits provided may be dealt with this way. The benefits must be minor, irregular, or impracticable. Impracticable means that the expenses and benefits are difficult to place a value on or divide up between individual employees. An example would be the costs of a staff party where the £150 per head limit has been exceeded.

From 6 April 2023 there is a new online service available from HMRC for employers and their agents to apply for a PAYE settlement agreement (PSA). Employers and agents can also use the online service to amend or cancel an existing PSA.  To support these changes, HMRC has updated its guidance on PSAs to include reference to the new online tools.

What can be included in the PSA depends on when you apply.  If you applied for a PSA before the start of a tax year, you can include any expenses and benefits contained in the agreement. If you applied for a PSA part way through the tax year, you may need to report some items separately on form P11D.

Employers must pay any tax and Class 1B NIC owed under a PSA by 22 October after the tax year that the PSA applies to (19 October if paying by cheque).

For further information on P11D’s or PSA’s, please contact Nick Whitemore on 023 8202 7498.