For employees (who are not directors) earning less than a rate of £8,500 per year (including their share of the value of the policy), you have:
- no reporting requirements; and
- no tax or NICs to pay
For all company directors or employees earning at a rate of £8,500 or more per year:
- their share of the cost of the policy must be reported on form P11D
- the employer pays Class 1A NICs on the values reported
- the directors and/ or employees under the policy are subject to a tax charge on the value reported on form P11D
The total value of all employee benefits must be reported annually on form P11D(b) which must be filed (on paper or online) with HMRC by 6th July and any Class 1A National Insurance is payable by 19th July. Late P11D(b)s will be subject to penalties.
The good news is that the expenditure should be tax-deductible for the company though.
Benefits and expenses is a very complex area and I would encourage you to seek professional advice with your local TaxAssist Accountant, who may be able to explore any exemptions or reductions in reporting requirements.
By Jo Nockels
Disclaimer: Advice shared in this blog is intended to inform rather than advise. 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 forum, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.