Muras Matters: Forms P11D and P11D(b)

As you will be aware, the above HMRC forms are used to report benefits and expenses provided to employees and directors each tax year.

An employer is liable for Class 1A National Insurance Contributions on taxable benefits, at 13.8% (2018/19), as reported on the employers declaration form P11D(b).

Form P11D Deadline

The deadline for submitting forms P11D (and providing a copy to employees) and also form P11D(b) for 2018/19 is 6 July 2019. Failure to submit the forms by this date will potentially lead to a penalty.

Previously, HMRC would know whether to expect a P11D(b) from the year end PAYE forms under RTI, however reference to the P11D(b) was removed from the RTI submission a few years ago. A reminder will be sent through the post to employers where HM Revenue & Customs expect a P11D(b) to be filed. If the completed form is not filed then a late filing penalty will be issued.

Automatic Penalties

Any penalty for the late submission of form P11D(b) is charged with reference to the number of P11D’s due for the year – £100 per every 50 employees (or part of 50) per month or part month until the form is submitted.

In addition to late filing penalties, it is more important to be aware that penalties for completing an incorrect form P11D can be up to £3,000 per form, so it is essential they are right!

Employment Related Securities and share scheme returns

The 6 July 2019 deadline also applies to the submission of annual returns for employment related share scheme members (previously known as form 42) and notifying HMRC of certain share acquisitions for the year to 5 April 2019.

The online forms must be completed in respect of almost ALL SHARE ACQUISITIONS IN ANY CIRCUMSTANCES by a director or employee. Failure to submit a form  and failure to do so can lead to an initial penalty of £100, rising to £400 after 3 months, £700 after 6 months and daily penalties after 9 months. It is therefore important that the forms are completed for each tax year but they can easily be overlooked.

A form may be required in the following circumstances: the incorporation of a business, the gift (or other acquisition) of shares to/by an employee, a new issue of shares or a share for share exchange. Broadly the only exceptions are the transfer of initial subscriber shares when a new company is incorporated or if the transfer is in the course of a normal family or personal relationship. In addition, nil returns can be required if forms have been filed in the past.

If you would like more information or if you require our assistance completing any of the above forms please contact our Tax Director, Jenny Marks.

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