Revamp form P11D and surrounding processes, says ICAEW

ICAEW’s Tax Faculty has suggested improvements to the employer annual return of employee expenses and benefits (form P11D) to HMRC, to make it easier for employers to complete.

Making specific changes to the form (detailed in the letter published as ICAEW REP 01/23) would help to ensure that correct PAYE code numbers can be issued, meaning that employees pay the right amount of tax first time.

The faculty has also suggested modifying some surrounding processes and rules for reporting benefits-in-kind (BiK) to ease administration for HMRC, employers and employees. This includes:

• identifying one-off benefits and expenses such as relocation allowances, which are often treated as recurring when calculating code numbers;
• amending returns, which currently is a paper-only process;
• reporting the taxable value of payrolled BiK on self assessment returns, which under the law does not align with the figure in form P60; and
• P11Ds for unpaid employees – for whom HMRC cannot easily process forms P11D as the employees don’t have a payroll record in HMRC’s database. 

The faculty also recommends possible modification of the law to make it possible to payroll beneficial loans and employer-provided accommodation.

Finally, the faculty suggests that HMRC sets out a clear timeline for abolishing the form, or undertakes a proper review to fix known issues with the P11D and the surrounding processes.

ICAEW’s Tax Faculty is recognised internationally as a leading authority and source of expertise on taxation. The faculty is the voice of tax for ICAEW, responsible for all submissions to the tax authorities. Join the Faculty for expert guidance and support enabling you to provide the best advice on tax to your clients or business.