HMRC retires online P11D form for small companies

In its April update the HMRC directed advisers to a section in the February 2022 Employer Bulletin entitled Decommissioning of HMRC’s Online End of Year Expenses and Benefits Service April 2022 that warned that the interactive PDF service, commonly used by small and medium-sized employers, would not be available for use for 2021/22 submissions.

Moving forward employers who previously relied on the online end-of-year expenses and benefits service need to consider their options now that the online form is not available for tax year 2021/22 and onwards.

The services provided:

• Interactive PDF capability enabling small- to medium-sized employers (up to 150 employees) to create P11D forms for their employees
• The capability to create, send and amend P11D and P11D(b) forms electronically or for printing and posting
• The facility to create and submit a “Nil P11D(b)”, essentially saying to HMRC that there is no Class 1A National Insurance liability.

The tax year 2021/22 is not complete until employers have completed all of their P11D returns and made submissions to HMRC. This annual process includes the submission of form P11D(b) and payment of Class 1A National Insurance contributions.

Employers who do not payroll their benefits, which bypass the annual P11D process, previously had three ways to submit returns electronically:

• Via payroll software (depending on functionality)
• HMRC’s PAYE Online service (for submissions up to 500 employees)
• HMRC’s online end-of-year expenses and benefits service (for submissions up to 150 employees)

There are now only two ways for employers of any size to report and submit details of expenses and benefits for tax year ended 5 April 2022: via payroll software (depending on functionality) and HMRC’s PAYE Online service (for submissions up to 500 employees).

HMRC provides a list of “recognised” free and paid for software, however, not all software is the same; some payroll programs may have expenses and benefits functionality, while others may not. 

HMRC’s PAYE Online service can be used by firms that relied on the online PDF. The PAYE Online service caters for more than 150 employees and there is no requirement for downloading the latest version of Adobe Reader.

Once 2021/22 P11D / P11D(b) returns are submitted, the decommissioning could prompt employers to consider the move to payrolling expenses and benefits.

Payrolling is where an employee puts the taxable value of an expense or benefit through the payroll, the P11D obligation is avoided altogether. The tax liability is collected via the payroll and removed from the employee’s tax code. However, employers have to register to be able to do this and need to have processes in place to know the taxable benefit on a per-pay-period basis rather than obtaining the value once annually.