A Guide to the P11D Tax Form

In this guide, we will look at what a P11D is and tell you everything you need to know, from who needs to file one to what information needs to be included.

What is a P11D?

A P11D is a tax form used to report items or services that you or your employees receive from your company.  These are known as benefits in kind. Some examples of benefits in kind include:

  • Private Healthcare
  • Company cars
  • Non-Business travel/entertainment expenses
  • Interest-free loans
  • Gym Memberships

When should you file your P11D?

P11Ds are filed by the employer not the employee and should be filed by 6TH July following the tax year in question. For example, for the tax year 6th April 2020 – 5th April 2021, your P11D would need to be filed by 6th July 2021.

What happens if you do not file a P11D?

HMRC will give you a fine if you file late or file incorrectly. If you miss the deadline, you will not incur a fine straightway, but you should aim to file this as soon as possible. HMRC will fine your company £100 per month per 50 employees.

 What should be included on your P11D?

Information that should be included on your P11D for each employee includes:

  • The name of the employee
  • Date of birth & gender
  • National insurance number
  • Payroll reference number
  • Prices for products/services provided
  • The total cash equivalent to the value of the goods provided

 How to file a P11D

P11Ds can be filed electronically to HMRC and can be done through most payroll software’s. You can find out more about filing P11D on gov.uk.

How does a P11D affect your tax code?

A P11D can alter your tax code due to you needing to pay additional tax on the benefit. Altering your tax code will reduce your tax-free allowance to compensate for any tax owed.

What is a P11D(b)?

A P11D(b) is a form employer must submit summarising the individual P11D forms they have completed for their employees.

Help with your P11D

If you need help with your P11D we would be happy to help. Please get in contact with us for more information.

Working out Corporation Tax on calculator

How to Pay Corporation Tax

As a limited company based in the UK, you must legally pay Corporation Tax on all taxable profits regardless of where in the world the profit was made. This guide explains everything you need to know about Corporation Tax, including what it is, when it’s due, how to work out how much you owe based on the Corporation Tax rate, and how to go about paying Corporation Tax.

 

What is Corporation Tax?

All UK-based limited companies must pay Corporation Tax. Foreign companies with a UK branch or office are also required to pay tax on the profits made in the UK, along with clubs, co-operatives, and other unincorporated associations.

For organisations based in the UK, the tax applies to all taxable profits whether the money came from work completed in the country itself or abroad. More specifically, your company or association must pay Corporation Tax on the money it makes from:

  • Its usual business (referred to as your ‘trading profits’);
  • Sale of assets for more than they cost (known as ‘chargeable gains’);
  • Investments.

Bear in mind that you won’t receive a bill for Corporation Tax and the onus is on your organisation to arrange the payment – you must first register with the Government, which can be done online via the gov.uk registration page.

 

When is Corporation Tax due?

The deadline for paying Corporation Tax is dependent on the profits your organisation makes:

  • If your taxable profits are less than £1.5 million, you have 9 months and 1 day after the end of your accounting period to pay the Corporation Tax owed (in most cases, your accounting period will be the same as the financial year of your business).
  • Organisations with taxable profits in excess of £1.5 million must pay Corporation Tax in a series of instalments: the first instalment must be paid within 9 months and 1 day of the accounting period ending, then subsequent instalments are usually required every 3 months from then on.

Ensure that you have paid the amount owed by your deadline – if you miss a deadline, your organisation will be charged interest on the outstanding amount. On the other hand, if you pay your Corporation Tax early, HMRC will pay interest to your business.

In situations where your deadline falls on a bank holiday or weekend, make sure that your payment goes through by the last working day before this.

 

How to work out Corporation Tax

As part of your Company Tax Return, you’ll need to work out how much Corporation Tax your organisation owes. The current Corporation Tax rate in the UK is 19%. From the 1st April 2023, Corporation Tax will increase to 25% for profits of over £250,000 (see the government announcement to learn more).

To work out how much Corporation Tax you owe, first calculate your total profits for the accounting period (including chargeable gains and investments). Subtract from this the value of costs associated with running your business, including allowances on assets you’ve bought such as:

  • Equipment
  • Machinery
  • Business vehicles

Consult the gov.uk ‘Allowances and tax reliefs’ page for more detailed information on the deductions you can make.

The amount left after deducting allowances is your taxable profit for Corporation Tax. The amount you owe is based on the rate during the accounting period in question – this would be 19% of the taxable profit at present.

If the rate of Corporation Tax changed during your accounting period, then separately work out the tax due during the period before the rate was changed and during the time after. Add these two amounts together to get your total Corporation Tax owed for the accounting period.

 

How do I pay Corporation Tax?

There are several payment options for Corporation Tax, each of which takes a different number of days for your transfer to clear. Check how long your chosen payment method will take and make sure to allow enough time for the payment to go through in time for the deadline.

Regardless of which option you choose, you’ll need to have your 17-digit Corporation Tax reference number for the accounting period to hand. Before you make your payment, make sure you’ve submitted your Company Tax Return, which includes the amount of tax you owe.

Same-day payments

If you’d like your payment to go through on the same day, you can either pay via Clearing House Automated Payment System (CHAPS) or Faster Payments (online or over the phone). 

Three working day payments

BACS transfers, Direct Debits, online payments, and in-person payments at banks or Post Offices take around three working days in most cases. Paying corporation tax online is easy – just visit the gov.uk ‘Pay your Corporation Tax’ page

Five working day payments

The first time you set up a Direct Debit for recurring Corporation Tax payments, it should take around five working days for the payment to go through.

 

Checking your payments

Once you’ve paid your Corporation Tax, you should log in to your HRMC account to ensure that your payment has been received (your account will usually be updated within a few days of you making the payment).

 

Should I tell HMRC if there is no tax due?

Even if you calculate in your Company Tax Return that you have no Corporation Tax outstanding, your organisation is legally required to notify HMRC of this. You can inform them either by completing a ‘nil payment’ form on the HMRC ‘No Corporation Tax payment due’ page or by returning a signed Corporate Tax payslip for the accounting period marked with the words ‘NIL due’.

 

This guide has explained how to pay Corporation Tax, as well as providing all of the information you need on deadlines and how to work out how much your organisation owes.

We can help you with your Corporation Tax by:

  • Informing HMRC that your company is liable for Corporation Tax
  • Working with you to calculate how much you owe, and ensuring that you meet your deadline
  • Establishing any allowances and reliefs your business may be eligible for

Get in touch today to learn more.

UK Budget 2021: The Key Points

Today, Chancellor Rishi Sunak announced the 2021 Budget, laying out plans on how the country will recover from the economic effects of coronavirus.

Sunak’s plans detailed how a further £65 billion worth of support will be introduced, as well as several other announcements that will affect businesses, the self-employed and working families. Here is a breakdown of everything you need to know.

Further COVID-19 support

The chancellor delivered some key points surrounding support following coronavirus:

  • Furlough will be further extended up until September 2021. The Government will continue to pay 80% of employees’ wages for hours that they cannot work. Employers will be asked to contribute 10% in July and 20% in August.
  • The self-employed will receive further help as it was announced that the Self-Employment Income Support Scheme will be extended up until September 2021, covering 80% of average trading profits up to £7,500. These schemes will also become more accessible as the access to the grant is widened: if you filed a tax return for the 2019-20 tax year, you will now be eligible to claim for the first time.
  • The £20 uplift in Universal Credit will be extended for another six months. A one-off payment of £500 will be available to eligible Working Tax Credit claimants.

 

Help for businesses

There have been several new plans announced to help businesses:

  • From April 2021, businesses will be able to claim a new Restart Grant to help them open following the coronavirus pandemic. These are a one-off cash grant of up to £18,000 for hospitality, accommodation, leisure, personal care and gym businesses. Retail businesses could claim up to £6,000.
  • A new Recovery Loan Scheme was announced, meaning that businesses of any size could get a loan of between £25,001 and £10 million to help businesses through the next stage of recovery.
  • The apprentice hiring incentive has now doubled meaning businesses will now receive a payment of £3,000 if employers hire a new apprentice between 1st April 2021 and 30th September 2021.
  • An additional £300 million in support will be provided to the arts to support theatres, museums and other cultural organisations.
  • The 100% business rates holiday will continue until June and then will be cut by two-thirds for the remainder of the year.
  • A Help to Grow business scheme had been announced to provide free training and discounts on productivity software to help businesses grow – you can apply for the Help to Grow scheme here.
  • All small to medium-sized businesses will be able to continue to claim up to two weeks of eligible Statutory Sick Pay costs per employee from the government.
  • Businesses will be able to carry back losses of up to £2 million for up to 3 years to support cashflow.

 

Taxation

  • The VAT cut for the hospitality sector will stay at 5% until 30th September, at which point it will then change to 12.5% for 6 months until April 2022.
  • Alcohol and fuel duty had been frozen.
  • Corporation Tax will increase to 25% in 2023. Businesses with a trading profit of £50,000 or less will be taxed at 19%. Businesses with profits greater than £250,000 will be taxed at 25%.
  • A new super-deduction will be introduced which will cut companies tax bills by 25p for every pound they invest in new equipment.

 

Housing

  • The Chancellor announced that 95% mortgages will return meaning first-time buyers have the option to buy a home worth up to £600,000 with a 5% deposit
  • The temporary cut in residential Stamp Duty Land Tax (NIL to £500,000) has been extended to 30th June 2021. From 1st July to 30th September 2021, the NIL rate band will be reduced to £250,000 before going back to £125,000 as from 1st October 2021.

 

National Living Wage & personal tax threshold

  • The National Living Wage will increase to £8.91 as of April 2021.
  • The personal tax threshold will freeze at £12,500 up until April 2022, after which point it will increase to £12,570 and then freeze again until April 2026.
  • The higher rate income tax threshold will be frozen at £50,270 from April 2022 to 2026.

 

If you need further advice following the proposed changes announced by Rishi Sunak, you can contact our team today and we will be more than happy to answer any queries you may have.

Construction workers

The Construction Industry Scheme (CIS) and CIS Deductions

The Construction Industry Scheme (CIS) requires contractors to deduct money from payments made to self-employed subcontractors and pass this on to HMRC. The amount taken off is referred to as a CIS deduction – it works as an advance payment on the subcontractor’s tax and National Insurance (NI) contributions.

If you’re a contractor, you must register for the scheme. As a subcontractor, you’re not required to register for the scheme but doing so will reduce your CIS deductions (more on this in the section below).

Over the course of this guide, we’ll cover everything you need to know about CIS and CIS deductions. Starting by explaining who the Scheme applies to, this post goes on to explain how much the deductions should be, how to register, and how to submit returns as a contractor.

 

Who does the Construction Industry Scheme apply to?

CIS applies to all construction contractors who pay subcontractors; it also applies to self-employed subcontractors working in construction and receiving payments from a contractor. If you are employed by a contractor and are subject to PAYE, then CIS deductions do not apply to you.

Most types of construction work are covered by the Scheme. If you’re working on a building, structure, or civil engineering project, then CIS applies.

The type of work involved could be:

  • Building work
  • Decorating, alterations, and repairs
  • Preparing the site
  • Cleaning the inside of buildings after construction work
  • Demolition and dismantling
  • Installation of heating, lighting, power, water and ventilation systems

There are some notable exceptions to CIS. You are not subject to CIS deductions if your work involves:

  • Architecture and surveying
  • Scaffolding hire
  • Carpet fitting
  • Making construction materials
  • Delivery of materials
  • Secondary work on construction sites such as running site facilities

If you’re unsure whether the scheme applies to you or not, visit the Government’s page.

 

How much should CIS deductions be?

For subcontractors who are registered with CIS, the standard rate is 20% of the invoiced amount for work and travel expenses. The total invoiced amount excludes VAT paid and any expenses for materials or tool hire.

In cases where the subcontractor is not registered with CIS, the rate increases to 30% of the invoiced amount (still excluding VAT and materials or tools expenses).

As a subcontractor working in construction, you can claim some expenses back when you fill in your Self-Assessment tax return – take a look at our CIS returns service to find out more.

 

Registering for the Construction Industry Scheme

Contractors that pay subcontractors must be registered for CIS, but we would also recommend that subcontractors register so that they are subject to the reduced deduction rate of 20% rather than 30%.

To register for CIS as a sole trader, head over to the Government’s portal. The following details will be required to complete the registration process:

  • Your legal business name or trading name
  • Your National Insurance Number
  • The unique taxpayer reference number (UTR) for your business or sole trading entity
  • Your VAT registration number (if you’re VAT registered).

If you’re registering as a company, you’ll need to use the online CIS305 form. To register as a partnership, use the CIS304 form.

 

Gross payment status

As a subcontractor, you can avoid having CIS deductions taken by applying for gross payment status when you register for CIS. To qualify for this, you must show that:

  • You’ve paid your tax and National Insurance on time before
  • You work in construction in the UK
  • You take payments through a bank account
  • Your turnover is more than £30,000 (excluding VAT and materials).

If all of these conditions apply to you, then you can apply for gross payment status during the registration process (visit the gov.uk page for more information).

 

Making CIS deductions

Before making a CIS deduction as a contractor, you need to go through the verification process:

  1. Contact HMRC with the details of the subcontractor.
  2. HMRC will check whether the subcontractor is registered.
  3. You will be contacted with the correct CIS deduction rate to apply.

In some cases, HMRC may contact you to advise you that no deduction is required. However, if a deduction is required:

  • First, calculate the total amount by subtracting VAT paid and materials or tools costs from the amount the subcontractor has invoiced. Apply the rate of CIS deduction that HMRC has advised (either 20% or 30%).
  • Make the deductions and send the deducted amount to HMRC.
  • Record details of the payment, material costs, and deduction amount.
  • Send the remaining payment to the subcontractor.
  • Complete a statement of deduction.

The CIS deduction statement should be sent to the subcontractor within 14 days of the end of each tax month.

 

Submitting returns as a contractor

As well as providing CIS deduction statements to their subcontractors, contractors must also submit their monthly CIS return within 14 days of the end of each tax month (this means the return must be submitted no later than the 19th of each month). For example, if you are making a return for the tax month from 6th April to 5th May, the deadline for this will be the 19th of May. 

To do this, you’ll need the following:

  • An email address
  • Your Employer Reference Number (ERN)
  • Your 13-digit Accounts Office reference number

When you’ve got these details together, visit the Construction Industry Scheme (CIS) online service to submit your returns.

 

This guide has explained the Construction Industry Scheme and CIS deductions. If you’re a contractor, we offer a comprehensive CIS returns service and can support you with everything from verifying subcontractors to deduction statements and CIS returns – don’t hesitate to get in touch.

Choosing a Crowdfunding Platform: Top Tips, Taxes, and Fees

As a content creator, crowdfunding platforms offer an easy and accessible way for you to generate an additional source of income through your work. Unlike other revenue streams such as advertising and merchandise sales that you might have explored, it’s easy to get started with crowdfunding straight away and there are no setup costs involved.

To help you pick which one is right for you, this guide explores some of the pros and cons of the main crowdfunding platforms and offers insights based on our accountancy work for content creators.

Working From Home Tax Relief

Millions of us have been working from home due to the COVID-19 pandemic. If you’ve been working remotely, your household bills might have increased over the past few months – and you may even have had to invest in a new broadband connection to support your work. The good news is that you may be able to claim tax relief to help cover the extra cost.

The Government’s working from home allowance scheme began in October 2021 and has already had an impressive uptake: in the first six weeks alone, more than one million people applied to HMRC. In this WKM guide, we explain who is eligible for the new tax relief, the amount you could claim, and how to claim it.

Calculator and balance sheet

The Complete Guide to Director’s Loans

This WKM guide explains what director’s loans are and when you might want to consider making one. It goes on to outline how this type of loan works in practice, exploring the tax implications associated with a director’s loan as well as the repayment process. 

New government grant for small businesses: The Small Business Grant Fund (SBGF)

Yesterday the Minister for Regional Growth and Local Government announced that there would be £20 million in new funding to help businesses across England get back on track due to COVID-19.

Small to medium-sized business in England can receive the Small Business Grant Fund (SBGF) of between £1000-£5000 to be spent on professional services fees to help get business back on track.