Benefits in kind, the P11D and the P11D(b)

A benefit in kind is something of value you give an employee that is not cash - a company car, private medical cover, an interest-free loan.

Each one produces three things: tax for the employee, Class 1A National Insurance for you, and paperwork for both.

Recording a benefit

Benefits are recorded on the employee's own record, under Tax, then Payroll.

For each one, enter what it cost and anything the employee made good - reimbursed you for. The difference is the cash equivalent, and that is the figure everything else is built from.

Class 1A National Insurance

Your business pays Class 1A on the cash equivalent of most benefits.

Some kinds carry none, and the reason is always the same: National Insurance has already been charged on them through the payroll. Vouchers and expenses paid on an employee's behalf are both treated as pay, so they bear Class 1 instead - but they still go on the P11D for income tax.

Payrolling a benefit

Instead of taxing a benefit through the employee's tax code, you can payroll it: the tax comes off through each payslip.

A payrolled benefit is left off the P11D, but it still counts towards Class 1A and still appears on the P11D(b). Payrolling changes the income tax route and nothing else - it does not reduce what your business owes.

HMRC does not allow payrolling to start or stop mid-year, so the choice is fixed once the first pay run of the tax year has been completed. Kontala explains which way it is locked rather than just greying the box out.

The P11D

One per employee, under Reports, then P11D expenses and benefits.

It lists their benefits by P11D section with the cash equivalent of each. Payrolled benefits are omitted, and the screen says how many and how much has been left off.

The P11D(b)

Your annual declaration of the Class 1A you owe, under Reports, then Benefits and P11D(b).

This item appears in the menu only once you have recorded a benefit.

The screen reconciles the total across your employees against the declaration, so a base that does not equal the sum of the P11Ds is visible rather than silent.

Deadlines

For a tax year: file by 6 July and pay the Class 1A by 22 July of the following year.

Those are different days, deliberately - filing and paying are not the same deadline.

Filing

Kontala does not send the P11D(b) to HMRC. File it on HMRC's Expenses and benefits service, then record it here - that is what puts the Class 1A charge in your books.

If the benefits change after you file, the screen shows what you declared against what the figures now come to. HMRC expects an amended P11D(b) and corrected P11Ds for anyone whose benefits moved.

Related

• P60s and P45s
• Send RTI to HMRC
• Payslips