Written in partnership with Hive HR Solutions.
As an employer, providing benefits to your employees is a great way to support them, but it also comes with certain tax obligations. One key requirement in the UK is the P11D form, which reports benefits and expenses provided to employees outside of their regular salary. Here’s everything you need to know about P11D forms, their impact, and how to ensure compliance.
Table of contents
What is a P11D and why is it important?
A P11D is a form used by UK employers to report taxable benefits and expenses given to employees. HMRC uses the information submitted on a P11D to calculate how much tax is due on these benefits.
In addition to the P11D form, employers are also required to pay Class 1A National Insurance Contributions (NICs). These are employer-only NICs and must be paid by 22nd July following the end of the tax year. Understanding how and when to report is essential to staying compliant with HMRC regulations.
P11D vs payrolling benefits
Payrolling benefits lets employers tax certain employee benefits through payroll in real time, avoiding the need to submit separate P11D forms. This can simplify reporting and help keep employee tax codes accurate.
Employers must register with HMRC before the tax year begins. Some benefits, like accommodation or interest-free loans (over £10,000 per tax year), can’t be payrolled and still require a P11D.
What are deemed as benefits and expenses?
Company benefits are perks or non-cash compensation provided to employees, such as company cars or private medical insurance. Expenses, on the other hand, are costs incurred by employees for work-related purposes, such as travel or meals. If these expenses exceed HMRC’s allowable limits, they may be considered taxable benefits.
What benefits are subject to P11D reporting?
Not all benefits are taxable, but some common ones requiring P11D reporting include:
- Company cars
- Private medical insurance
- Interest-free or low-interest loans (e.g., season ticket loans), if they exceed £10,000 in a tax year
- Employer-provided accommodation
- Expense payments (e.g., travel and entertainment expenses that exceed HMRC’s allowable expenses rules)
This isn’t an exhaustive list. Employers should consult HMRC guidance to determine whether P11D reporting applies to the benefits they provide.
Salary sacrifice and P11Ds
Salary sacrifice schemes allow employees to give up part of their salary in exchange for a non-cash benefit. Whether or not these benefits need to be reported on a P11D depends on the type of benefit provided.
In general, if a benefit such as a company car or technology product is offered via salary sacrifice, it must be reported on a P11D. The taxable value is based on the higher of the cash equivalent of the benefit, or the amount of salary sacrificed.
This means salary sacrifice can affect how and whether a benefit needs to be reported, and whether it creates a tax liability. Employers should review each scheme carefully and ensure they understand if the benefit qualifies for P11D reporting or is exempt.
Common salary sacrifice exemptions
Not all salary sacrifice benefits result in a P11D requirement. There are some important exceptions to the general rule which employers should be aware of. Exempt schemes include:
- Employer pension contributions (e.g. into a workplace pension)
- Workplace nursery schemes (if they meet HMRC’s exemption rules for providing on-site or contracted nursery places)
- Childcare vouchers (this is only applicable if the scheme started before October 2018)
- Cycle to Work schemes (if it meets HMRC’s conditions for exemption)
These can still be provided through salary sacrifice without triggering a P11D reporting requirement, as long as they meet the relevant conditions.
Note that whilst the Benefit in Kind tax rate for electric vehicles is currently only 3%, it is still a taxable benefit and a P11D will need to be submitted.
What are the employer’s responsibilities?
If you provide taxable benefits to employees, you must:
- Meet reporting deadlines – If benefits aren’t payrolled (i.e. not taxed through payroll in real time), P11D forms must be submitted annually by the 6th July following the end of the tax year. Late submissions can result in penalties. (See “Payrolling benefits” at the top of this article for an alternative to using P11D forms.)
- Pay Class 1A National Insurance Contributions (NICs) – Employers must pay NICs on the value of benefits, due by 22nd July.
- Maintain accurate records – Employers should keep detailed records of benefits provided in case of an HMRC audit.
What does it mean for employees?
Employees receiving taxable benefits should be aware of the following:
- Tax liability: Employees should be aware of whether a benefit is taxable or tax-free, as this determines whether their tax bill will increase. Taxable benefits, such as private medical insurance or company cars, can lead to higher tax deductions. However, tax-free benefits, like employer pension contributions or cycle-to-work schemes, do not increase tax liability.
- Tax code adjustments: HMRC usually adjusts an employee’s tax code to reflect the taxable benefits, which means tax is deducted automatically from their salary.
- Impact on take-home pay: If an employee receives taxable benefits, their overall tax liability may increase, leading to higher tax deductions from their salary. This could reduce their take-home pay, so employees should be aware of how benefits might affect their monthly income.
How to submit a P11D
Employers can submit P11D information using one of two methods:
- Online via payrolling benefits – This allows for real-time tax adjustments and immediate confirmation of submissions.
- Paper submission – Though less common, employers can still submit paper P11D forms, which must reach HMRC by 6th July following the tax year.
Stay compliant with P11D reporting
Staying compliant with P11D reporting means understanding which benefits are taxable, how salary sacrifice schemes impact reporting, and whether any exemptions apply. When in doubt, consult HMRC guidance or seek professional advice to avoid costly mistakes.
Commonly asked questions
Is Maji is a taxable benefit?
No, Maji is not considered a taxable benefit. Access to the Maji platform is provided by the employer to support employees’ financial wellbeing and education, and does not trigger a Benefit in Kind (BIK) or require P11D reporting. Maji falls outside HMRC’s list of reportable non-cash benefits.
How can Maji help with P11D reporting and compliance?
Maji helps employers navigate benefit compliance in several ways:
- Clear classification of benefits: We help employers understand which benefits available through Maji may have tax implications, and which are exempt, such as workplace pensions or compliant workplace nursery schemes.
- Screening and selecting partners: Maji only works with approved providers whose schemes are HMRC-compliant and offer clear guidance on reporting obligations. This includes working with partners like Hive HR Solutions, who provide P11D support and outsourced payroll services.
- Expert guidance and tools: Through our platform, employers gain access to expert coaching and resources to stay informed about tax rules, deadlines, and salary sacrifice schemes that are exempt from P11D reporting.
- Payroll integration support: Where payrolling of benefits is preferred, we help ensure the benefits selected are suitable for real-time taxation, reducing administrative burden and avoiding missed deadlines.
About Hive HR Solutions and Maji
Hive HR Solutions is an HR Consultancy that provides tailored answers to all your HR support problems. Maji is a financial wellbeing platform that supports employees with personalised financial education, tools, and expert coaching. Together, Hive HR and Maji are committed to supporting SMEs with salary sacrifice schemes, financial coaching, and holistic financial wellbeing solutions.
