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Payrolling benefits vs. P11D

Created on  | Last modified on 

Summary

If you provide taxable benefits or benefits in kind (BIKs) to your employees, for example company cars or medical insurance, you need to submit a P11D(b) form to HMRC by 6 July each year.

Description

You can either include the cash equivalent value of the benefits in your payroll and deduct the tax, or complete form P11D for each employee:

  • You can use Sage 50cloud Payroll to payroll benefits, with the exception of accommodation, beneficial loans and credit tokens or vouchers.
  • Alternatively, Sage 50 P11D is a convenient way to help you manage your employees’ taxable benefits and calculate Class 1A National Insurance.  It’s easy to use and there’s no requirement for in-house experience.

Resolution

Using Sage 50cloud Payroll

  • You must register with HMRC before 5 April 2021 for the tax year 2021/2022.
  • Once the tax year starts you have to payroll the benefits for the whole of the tax year, or until you stop providing them.
  • You need to work out the Class 1A National Insurance contributions on benefits and manually complete form P11D(b).
  • If you make a mistake, you may need to roll back or restore your data.
  • You need to calculate the P11D values or cash equivalent manually, then manually enter the figures into Sage 50cloud Payroll.

 Using Sage 50 P11D

  • You can print P11D forms for your employees.
  • You can submit your P11D forms and P11D(b) to HMRC in just a few clicks.
  • It's easy to correct mistakes, you can just delete the benefit and start again.
  • If an employee leaves part-way through the tax year, it doesn't matter, they don't have to be employed to receive the benefit.
  • When you set up your benefits, you can use the Sage 50 P11D software to calculate the figures.

Once you're registered for payrolling benefits, you need to provide a letter to your employees letting them know what it means for them. You must give your employees the following information before 1 June after the end of each tax year:

  • Details of the benefits you've payrolled, for example, car fuel.
  • The cash equivalent of each benefit that you've payrolled.
  • The relevant amount you've payrolled for optional remuneration (OpRA).
  • Details of benefits you haven't payrolled.

You can give this information on your employees' payslips or in a separate note or statement. It should be clear to employees:

  • What benefits have been subject to tax.
  • How much of the value of each benefit you've collected and reported tax on.

If your employees fill in a Self Assessment tax return, they'll need this information so they can inform HMRC.


Want to buy Sage 50 P11D?

Sage 50 P11D includes the legislation for the 2020/2021 tax year and ensures the information you submit to HMRC is secure and accurate.



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