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HMRC decommissions PDF service for P11D submissions

Users of HMRC’s interactive PDF service for submitting up to 150 P11D forms may be surprised to find that it’s now being decommissioned.

If you’re one of the small employers who relied on the convenience of this Online End of Year Expenses and Benefits service, you might wonder what your options are now.

It’s important to note that P11D returns are not going away completely – it’s just the way you report benefits in kind
that’s going to be different from now on.

This blog explains how P11D submissions are changing in 2022 and the alternative methods for reporting taxable benefits and expenses.

What’s happening to the P11D form?

Though the P11D return has been around since the 1960s, long before the creation of HMRC as we know it today, the time has apparently come for HMRC to retire its ‘legacy’ reporting method.

To clear up any confusion about what a P11D is, it’s a form used by employers and company directors to declare ‘benefits in kind’. These are taxable perks from the business that aren’t a part of the employee’s or director’s salary – such as company cars, health insurance, or relocation expenses.

Employers need to submit a P11D to HMRC for every employee and director receiving these benefits, and a P11D(b) form
to summarise the total. The business can then pay any outstanding Class 1A National Insurance contributions.

Previously, companies with up to 150 employees could use the Online End of Year Expenses and Benefits Service to create and send P11Ds and P11D(b)s electronically, which could also be printed and posted if the business preferred to submit them that way.

However, the February 2022 Employer Bulletin announced that HMRC would be retiring this service from April 2022. Unfortunately, this means that employers won’t be able to use it when filing P11Ds for the 2021–2022 tax year – for which the deadline is 6th July 2022.

With the move towards Making Tax Digital, where all tax returns can be submitted digitally through the same portal for convenience, it’s not that surprising for HMRC
to discontinue the older service – but with many businesses still using it, the transition may be rockier than they anticipated.

While HMRC says they’ll still accept limited P11D paper returns from businesses who can’t file online or set up payrolling for valid reasons, this is likely to be phased out, too.

What are the alternatives for filing P11Ds?

Now that HMRC’s End of Year Expenses and Benefits service
is out of commission, there are two ways left to submit electronic P11D returns. Of course, there’s no need to complete these forms if there are no benefits in kind for you to declare – but if there are, here’s how to do it.

Firstly, if you’re already using payroll software, it makes sense to use it for P11Ds, too. The problem for many businesses is that not all such software has features for benefits and expenses, and it might not be a good time to change providers. Getting new software can be expensive and disruptive, after all – even with payroll software guidance from HMRC.

However, employers needing to submit more than 500 forms
are required to do so using payroll software, anyway. It can still be much faster than using the old PDF or paper return services.

Secondly, you have the option of moving to the PAYE Online Service. This shouldn’t be a difficult switch if you were using the online PDF service – PAYE
has even more functionality. All your business needs to access it is your Government Gateway ID, the same as before.

HMRC’s PAYE Online Service caters to companies with 150 to 500 employees, and also allows you to check payments and file P46 (Car) reports for company cars. It’s much easier to access, as you don’t need a specific browser or the latest version of Adobe Reader to do so.

Though the February announcement didn’t give much notice, businesses must decide which of the remaining options works best for them.

Should you payroll taxable benefits?

Though it’s not an option for the 2021–2022 or 2022–2023
tax years, bookkeepers might be interested in the potential of payrolling benefits in kind.

When the taxable value of a benefit or expense is put directly through payroll software, there’s no need to file a P11D
separately for the employee. The tax liability is applied for each pay period (usually monthly) rather than making an annual declaration of the total.

There’s more frequent administration involved with payrolling taxable benefits this way, but you’ll have the advantage of only having to submit a P11D(b) for all benefits and National Insurance contributions instead of submitting individual P11Ds as well.

You’ll just have to register online with HMRC to let them know that you’ll be payrolling taxable benefits in kind. Since the deadlines for registration have already passed, it’s too late to apply for the next tax year, but you have until 5th April 2023 to register for the 2023–2024
tax year.

Once you’ve registered and begin operating this way, you should find that there’s less paperwork, fewer HR enquiries, and more accurate monthly tax deductions with simpler tax codes.

Get P11D advice from GBAC

We’re well aware of the fast pace of financial digitalisation here at GBAC, where our highly trained team of accountants likes to be ahead of the curve. We’ve been helping businesses of varying sizes overhaul their payroll and tax systems for years – so we’re well-placed to help yours, too.

Whether you need professional guidance on payroll software, keeping accurate accounts, or filing P11D forms correctly, GBAC, accountants in Barnsley, can provide a range of financial services. Just get in touch by calling 01226 298 298 or emailing info@gbac.co.uk
to get started on updating your business.