As an employee or director, you may receive additional benefits from your employer which are in addition to your salary or wages. These may include health insurance, company cars and interest-free loans.
These so-called ‘benefits in kind’ may be taxable, in which case the value of the benefit needs to be reported to HM Revenue and Customs (HMRC) by your employer on form P11D at the end of the tax year or via the payroll.
To avoid receiving a big tax bill, HMRC will normally look to adjust your tax code so that your tax bill for your benefit is collected throughout the year from your wages.
Although your benefit has been reported to HMRC and you are likely to have paid some or all the tax on it, you will still be required to enter the details from your P11D onto your self-assessment tax return. A tax return should give a complete picture of your tax affairs, and therefore include all your taxable income, allowances, deductions and reliefs. Any tax you have paid at source (such as the PAYE on your wages) is considered and knocked-off your eventual bill; meaning you don’t get taxed twice on your wages and benefits in kind.
If you don’t include the figures from your P11D, it will look like you have overpaid tax because your PAYE will be higher than expected and you may be incorrectly refunded for the tax on your benefit in kind.
If you don’t feel confident in completing your own self-assessment tax return, feel free to contact us and we would be happy to complete this on your behalf. Call 0800 0523 555 or enquire online here.
Last updated: 5th January 2021This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.