There continues to be uncertainty over exactly what employers need to do in order to report reimbursed expenses, much of which has come from confusion surrounding P11D forms. Whilst the system of employer dispensations was scrapped in April 2016, the forms themselves are still in existence, which is causing a lack of understanding in what should and shouldn’t be done with them for many employers.
From 2016/17, P11Ds should not be used to report employee expenses now wholly exempt from tax. These are expenses described as being “wholly, exclusively and necessarily” incurred during the performance of employment duties, such as costs for business travel, uniforms and phone bills.
As such, many employers will have had nothing to report on a P11D for last year. It might seem logical therefore that these employers wouldn’t need to submit either the P11D or the P11D(b) – a class 1A NIC declaration – even if HMRC has sent them a reminder to submit their P11D forms because they’ve submitted these forms in the past.
However, this is what’s causing much of the confusion. If an employer or tax agent has received a reminder letter about submitting a P11D but has nothing to report, doing nothing is not the right thing to do. Instead, a ‘no return of class 1A NIC declaration’ should be submitted online through the HMRC website. HMRC included a reminder about this in issue 66 of their Employer Bulletin in June 2017.
Further misunderstanding has also been created by the wording of the reminder letters being sent out. One sentence in the letter states: “If you have no class 1A NIC to pay, fill in form P11D(b) or the appropriate box on the Full Payment Submission or Employer Payment submission”. However, this refers to fields on the final EPS/FPS which were removed at the start of the 2015/16 tax year and are no longer in use.
HMRC responded by saying that the letter will be reviewed and updated, but this wasn’t able to happen before the 6th July 2017 deadline for paying class 1A NIC and submitting the P11D(b) form. All of this means that many employers were likely left scratching their heads over what was the right thing to do, something which HMRC will hopefully address soon.