Expenses and benefits for employers
Reporting and paying
You must report taxable expenses or benefits you provide to your employees to HM Revenue and Customs (HMRC). You can do this either through your payroll or online at the end of the tax year.
You also need to report how much Class 1A National Insurance you owe on all the expenses and benefits you’ve provided and pay any outstanding National Insurance.
What to report
Each expense or benefit is calculated differently. Find the type of expense or benefit you’ve provided to see what you’ll need to report and pay.
For ‘minor’ expenses or benefits, you might be able to make a one-off payment, known as a PAYE Settlement Agreement.
If you pay expenses and benefits through payroll (‘payrolling’)
Report employee expenses and benefits through your payroll software and pay tax on them throughout the year.
You do not need to report expenses and benefits for each employee at the end of the tax year if all their expenses and benefits are payrolled.
At the end of the tax year, you must still report the Class 1A National Insurance you owe by submitting an online form called a P11D(b).
To start payrolling, tell HMRC before the start of the tax year (6 April).
If you do not pay expenses and benefits through payroll
You must fill in an online form called a P11D and submit it to HMRC at the end of the tax year.
Complete a P11D for each employee you’ve provided with taxable expenses or benefits that were not payrolled.
You must also submit an online form to HMRC at the end of the tax year for any Class 1A National Insurance you owe. This is called a P11D(b).
How to submit a P11D or P11D(b) form
If you have fewer than 500 employees, fill in and submit the forms through HMRC’s PAYE Online service.
If you have more than 500 employees, fill in and submit the forms through your payroll software.
Paper forms will not be accepted.
Correct an error or report earlier years
To fix an error, report benefits and expenses for earlier tax years or tell HMRC about any changes, fill in both online correction forms:
Example
You submitted a P11D showing a medical benefit of £300 and a car benefit of £2,100. The car benefit is correct but the medical benefit should be £500. Submit a P11D correction form showing both the medical benefit of £500 and the car benefit of £2,100.
If you’re correcting a P11D(b), include the total amount of Class 1A National Insurance you need to pay - not the difference from your previous version.
Example
You submitted a P11D(b) showing you needed to pay £10,000 of Class 1A National Insurance and you realise you forgot to add £500. Your amended P11D(b) should show the amount as £10,500.
Penalties
You may have to pay a penalty if you carelessly or deliberately give inaccurate information in your tax return that results in you:
- not paying enough tax
- over-claiming tax reliefs