Speculation on P11D abolition


The main criticism of the P11D form was the unnecessary entering of legitimate business expenses on the form. We are against unnecessary red tape and agree that these sorts of entries should be eliminated by the use of dispensations and PSAs.

The P11D is a complicated form designed to return details to HMRC of all items made available to employees that are not provided through the payroll. As such the details that have to be shown can cover a host of areas and are subject to intricate and sometimes quite bizarre legislation to arrive at a figure that the employee will eventually pay tax on. Even if the P11D form was abolished, the government cannot afford to lose the revenue benefits legislation generates.

No UK payroll system is capable of working out cash equivalents to fully satisfy the complicated and ever changing benefits legislation. If the P11D form was abolished the burden for employers would actually increase as they will have to calculate cash equivalents for benefits on a weekly or monthly basis (in line with a payroll run) and not on an annual basis as most of them currently do. Furthermore most employees would end up subjected to an additional 11% Primary National Insurance Contribution charge that they currently do not have to pay.

Nobody likes to complete P11Ds but the solution is not to abolish the form but to bring the whole process of P11D production into the 21st century. This can be achieved by the implementation of well designed P11D software such as the P11D Organiser that can make the annual task much easier.

For example the P11D Organiser can:

  • Synchronise your employee details with your Payroll or HR software
  • Allow for all year importing and automatic validation of your raw benefits data to produce error logs for employers to return to their data providers to sort out
  • Email the P11D form or benefits statement to employees
  • Utilise the government gateway to file in year P46 and end of year submissions P9D, P11D and P11Dto HMRC via the internet. This has the added advantage of employees getting their tax codes updated more quickly than if paper submissions or spreadsheets are sent in.

In summary we would advise employers to modernise their current software and work within the existing system that although unpopular, has evolved over time and is understood by all concerned. It is better the devil we know than to allow for the introduction of a new ill-conceived regime for benefits taxation.