If you are an employer and you gave any of your employees any “benefits in kind” for the income tax year which ended on 5 April 2018, then you must file a P11D return by 6 July 2018. You must then pay any additional Class 1A National Insurance Contributions that are due by 19 July 2018.
Benefits in kind are non-cash benefits such as the use of a company car or van, private medical insurance, a low-interest loan, free housing which is not job-related, and a number of other items. There are rules for assessing the cash equivalent value of each type of benefit.
Company directors are considered to be employees of the company. Often they have a loan account with the company which is overdrawn, in which case the P11D needs to include details, and a benefit equal to the official rate of interest, currently 2.5%, will be assessed.
We encourage clients to charge interest at the official rate on overdrawn loan accounts, so no benefit in kind need be reported. We can draw up the paperwork to do this.
Interest apparently cannot be charged retrospectively, but if a company does not have a payroll scheme set up, and has made substantial loans to its directors, then charging interest is the only way to maintain the public revenue. This is an actual gap in the tax collection system.
Most employees other than directors, and most directors, will not have any P11D benefit to report. This whole business of P11Ds can look like a pain in the neck, but without it employers would find all sorts of creative ways to reward their employees and avoid tax.