P11D: avoid late-submission penalties!

HMRC can charge penalties if P11D Expenses and Benefits are not received by 6 July after the end of the tax year. Section 98(1)(b) Taxes Management Act 1970 provides for penalties for late forms P11D.

Section 98(1)(i) provides for a maximum initial penalty of £300 per form, for failure to submit forms P11D. HMRC needs to make an application to the first tier tribunal who can decide whether to impose these penalties.

Section 98(1)(ii) provides for continuing penalties of a maximum of £60 per day thereafter, until the failure has been remedied. These penalties can only be considered after an initial penalty has been imposed by the tribunal.

Section 98(4) provides that no continuing penalty can be imposed after the failure has been remedied.

Reasonable excuse for appealing penalties

Two types of penalties can be imposed by HMRC – a penalty for the first 12 months’ delay and a penalty for over 12 months’ delay. For both penalties, an appeal can be made if there is a reasonable excuse for the delay. The reasonable excuse must cover the whole of the period of lateness.

Reasonable excuse cannot be defined in absolute terms. The reasonableness will vary from case to case. Generally, you are looking for some circumstance which:

• is beyond the employer’s or contractor’s control and
• made the failure unavoidable and
• evidence that the failure was remedied without unreasonable delay once that obstacle was out of the way.

Returns and time limits for submission of forms

Any benefits and expenses payments made to an employee or director are reported on a form P11D. Copies of the form must be provided to HMRC and to the employee.

Unless the benefits are payrolled, benefits in kind do not go through the payroll and do not attract class 1 NICs.

An employer must register for payrolling before the start of the tax year (6 April). There is no P11D form to submit if the benefits are payrolled but a form P11D(b) must be completed to pay any Class 1A NICs.

Benefits in kind are subject to a special class of NIC, known as Class 1A. Class 1A NICs are payable by the employer only; there is no employee NIC liability on BIKs. The rate of Class 1A NIC for 2023/24 is 13.8%.

Any employer who provides either BIKs or expenses payments to their employees is required to submit a P11D for each employee.

The employer must also submit a form P11D(b) to HMRC with the forms P11D. The form P11D(b) is a return of the Class 1A NICs due on benefits provided to all employees during the tax year.

From 6 April 2023, employers must file expenses and benefit returns (forms P11D, P11D(b)) online unless you are digitally exempt.

The electronic filing options are:

• commercial payroll software
• HMRC’s PAYE Online service

If you think you may be digitally exempt, contact the employers’ helpline on 0300 200 3200 to see if you qualify for an exemption. Normally paper forms can only be used by:

• Individual employers, whose religious beliefs are not compatible with electronic communication (also a partnership or company where all the partners/directors and company secretary are made up of such individuals);
• care and support employers (individuals employing domestic or personal services in the employer’s home because of disability, infirmity or old age);
• an employer to whom HMRC has issued a direction because an electronic return is not reasonably practicable).

HMRC has set up a dedicated post room for submission of P11Ds. Forms should be sent to:

P11D and P11D(b) Team, HM Revenue and Customs BX9 1WE

You can also download and fill in forms P11D and P11D(b), and send them to the HMRC P11D support team.

If no forms P11D are required for the year, a ‘nil declaration’ can be made online.

Read HMRC's full guidance on benefits and expenses.