Form P11D and Form 42 Deadline Approaching
P11D 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% (2017/18), as reported on the employers declaration form P11D(b).
The deadline for submitting forms P11D (and providing a copy to employees) and also form P11D(b) for 2017/18 is 6 July 2018. 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.
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!
In previous years, an application could be made to HMRC for a dispensation from the requirement to include tax-allowable business expenses paid or reimbursed by an employer on the employee’s P11D, therefore saving time on completion of some P11Ds. However, since 2016/17 claims for dispensation are no longer applicable.
Form 42 (Employment Related Securities & Share Scheme Returns)
The 6 July 2018 deadline also applies to the submission of annual returns for employment related share scheme members (previously know as form 42) and notifying HMRC of certain share acquisitions for the year to 5 April 2018.
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.