P11D forms have changed: keep your employee outgoings in check

P11D forms are used by small business owners and other employers to provide information on employee expenses, bonuses and non-cash benefits to HMRC.

From the 2016/17 tax year onwards, small business owners will no longer be required to log details of such employee payments (including travel expenses and food allowances) on both the P11D form and Self-Assessment tax return.

Since April, reimbursed business expenses (which remain tax free) are not required to be recorded on these forms. Also, employees can now freely submit their tax returns without such payments listed.

Small business owners are still required to submit P11D forms in order to document non-cash benefits provided to employees.

Limited companies

It’s important to bear in mind that, in the case of limited companies, the company itself is the employer, and the owner (if salaried) is considered to be an employee. Therefore, many small business owners will be required to log their own non-cash benefits using P11D forms.

Sole traders

Sole traders aren’t classified as employees of their own business, but might need to submit P11D forms for any registered employees claiming cash expenses.

Industry reception of changes to P11D

This move has been welcomed by many industry commentators as a step towards simplifying the tax system. The change should simplify reporting, and make Self-Assessment tax returns much easier for employees to administer.

If you’re looking for more expert insight into your business tax requirements, call on 3 Wise Bears today.