A streamlined new system for employee benefits

Jen Lawton explains how the world of taxable benefits has changed since April 2016.

As an accountant, one of my many jobs is to prepare P11D forms on behalf of my clients. It’s the way in which we inform HMRC about the taxable benefits to employees that go beyond their salary.

At the start of the 2016-17 tax year, a number of changes came into force, which in theory make the process a little more streamlined.

First, the distinction between the P90 form and the P11D has been removed. The P90 existed for lower-paid employees, but it’s been decided that two systems running alongside each other is rather inefficient.

The second change is that the P11D was always compulsory if you were paying expenses related to employment. You’d show any payment on the form and then it could be reclaimed on a tax return. There’s now, however, an exemption for certain expenses – predominantly related to travel. (It’s important to note that you still need to keep full records though, as you must be able to provide proper documentation if HMRC raise a query.)

Third on the list of new rules is the option to pay tax through the payroll, where a P11D would previously have been used. This relates to all benefits not covered by the exemptions discussed above, with the exception of accommodation, loans, credit tokens and vouchers.

Finally, there is now an exemption for trivial benefits. If the cost doesn’t exceed £50 – and the employee isn’t receiving cash or cash vouchers – there’s no requirement for it to be filed in the P11D.  The exemption is capped at a total of £300 a year and includes any member of an employee’s family or household.

The net result of the changes is that we’re now in a rather simpler and more straightforward environment. But it’s certainly worth talking to your accountant about your own specific circumstances and the impact the new rules will have.