Form P11D is the end-of-year tax form, covering the benefits and expenses that an employer must complete for its employees. New from 2016, if HMRC agree that the expenses or benefits in kind are trivial, a P11D reporting dispensation need not be obtained nor the benefit declared. There is no charge to income tax for the employee or Class 1A NICs for the employer in certain conditions under the new rules:
the benefit must not be cash or a cash voucher;
the cost of providing the benefit must not be more than £50 (or if the benefit is provided to a number of employees and it is impracticable to calculate the cost for each person, the average cost per person must not be more than £50);
the benefit must not be provided as part of a salary sacrifice arrangement or any other contractual obligation; and
the benefit must not be provided in recognition of or in anticipation of particular services
The legislation will also apply where employees would have been eligible for tax relief if they had incurred and met the cost of the expenses or benefits themselves. However, the exemption will not apply where expenses are paid with the main purposes of tax or NIC avoidance.
Other changes in connection with the new rules are that all employees must be assessed for benefits in kind (the previous £8,500 salary limit is removed).
Any expenses incurred wholly in the course of business by the employee and then fully reimbursed by the employer also no longer need to be reported.
Do ensure that you keep good records to show that you are reviewing all employees on an annual basis in case of a PAYE inspection.
In summary, from April 2016 employers will only need to report benefits and expenses on a P11d if they are clearly taxable in the hands of the employee and will not need to claim a dispensation for expenses outside of this rule .. Yippee!!