Changes affecting 2022-23 P11D returns

From 6 April 2023, HMRC no longer accept paper copies of P11D and P11D(b) forms, meaning employers (except for the digitally excluded) will be required to submit the forms online.

The P11D form, is used by employers to report to HMRC taxable benefits and expenses provided to employees during a tax year. Form P11D(b) details the Class 1A National Insurance Contributions (NIC) due on certain benefits reported on form P11D and is also used where an employer, who has opted to payrolling benefits (tax purposes only), still has a liability to pay Class 1A NIC.

The online returns can be submitted through HMRC’s PAYE online service or by using a commercial service. HMRC’s online service can be used by employers and agents who need to submit up to 500 P11D and P11D(b) returns. For returns exceeding 500, commercial software will be required.

Where an employer or agent submits a paper P11D/P11D(b) return, the form will be rejected as it has not been submitted in the prescribed manner. HMRC will notify the sender of the rejection and direct them to the correct online process.

In addition, paper amendments to forms P11D/P11D(b) are no longer accepted after 6 April 2023 and electronic versions of the forms will also be required to be filed online.

The deadline for submitting the 2022-23 P11D returns is 6 July 2023.

P11D(b) Class 1A NIC rate for 2022-23 tax year

If paying by cheque, employers must pay the 2022-23 P11D(b) Class 1A NIC by 19 July 2023, or by 22 July 2023 if paying electronically.

There were a few changes during the 2022-23 tax year to the rate of NIC because of the introduction and subsequent reversal of the Health and Social Care Levy Act 2021. The blended Class 1A NIC P11D(b) rate for 2022-23 tax year is 14.53%.

Payrolling benefits and expenses

Employers can remove the requirement to submit P11D returns by opting for payrolling benefits. This can be done by registering with HMRC to use the online ‘payrolling employees’ taxable benefits and expenses service’. If the registration deadline is missed (before the start of the tax year) the employer may not payroll benefits until the following tax year unless it has a valid reason which HMRC accept and agree to allow the employer to informally payroll benefits.

From 6 April 2023 HMRC no longer accept new informal payrolling benefits arrangements. Where an employer did have an informal agreement with HMRC to payroll benefits for 2022-23 tax year, it must submit their P11Ds online and notify HMRC in advance that it is sending electronic P11Ds using the ‘PAYE – notification of payrolled benefits’ form. The employer should also look to formalise the arrangement as soon as possible.

All benefits can be payrolled apart from employer-provided living accommodation and interest-free and low-interest (beneficial) loans.

Do not forget any Class 1 NIC liability due

Form P11D identifies entries on which Class 1A NIC are considered due, but employers still need to be mindful that for those entries which are not highlighted as attracting Class 1A NIC, Class 1 NIC may still be due, and this will need to be accounted for through the payroll.