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Advice on staff benefits as latest tax deadline looms

Posted on June 20, 2016

Employers have less than four weeks to ensure all expenses and benefits in kind provided to employees have been declared as the latest deadline on the tax calendar looms.

A P11D return for each employee covered by the legislation must be completed for the year ended April 5, 2016. The deadline for submission is July 6, 2016.

The P11D is designed to ensure all benefits provided outside salary are subject to appropriate tax deductions – and a leading north-east accountancy firm has urged employers to ensure they are up to date with the latest regulations.

Michael Fotheringham, a partner with James Milne Chartered Accountants, said: “Effectively the return covers anything an employee has received from their employer during the year which they haven’t paid for. Employers have to be confident they are recording and declaring any expense or benefit which has not been processed through the regular payroll.

“The only real exceptions are expenses incurred and reimbursed during the course of work as well as the use of company mobile phones, which until relatively recently were also classed as a taxable benefit.

“It is essential that employers understand the responsibility sits with them, rather than the individual, to ensure benefits are declared – and there are potentially large fines for those who fail to meet their obligations.”

James Milne complete P11D returns on behalf of many clients each year and the range of items being covered in declarations is growing increasingly diverse. Despite the variety, there is one golden rule.

Michael Fotheringham added: “It is important to understand there are no grey areas. No matter how an employer or employee may try to justify something in their own mind, generally anything you get through your employment that you haven’t paid for must be declared for tax purposes.

“For example, your golf club membership may be paid for by an employer because it is viewed as a networking opportunity for the employee in business terms – but in the eyes of HMRC that isn’t a justification to avoid tax, it is a benefit like any other.

“Common items include company vehicles, gym memberships and health insurance as well as professional subscriptions. Right through to trade magazines, everything should be captured for any employee receiving a benefit. It is important to ensure you are receiving the best advice to avoid pitfalls and don’t leave anything to chance.”

Any company which has filed a P11D previously will receive a reminder and penalties for late returns are in place. Payment of Employer’s National Insurance due on certain benefits is due by July 19. Deductions of tax falling due by the employee on any benefit are made through the individual’s tax code.

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