Under taxation law, some expense payments and benefits are treated as taxable remuneration. This may mean there is Class 1A National Insurance and tax to pay on them. These items are recorded and declared to HMRC on a P11D in order that the tax and NI resulting can be calculated and collected. The P11D also extends to expense payments made to the employee by reason of their employment so this includes round sum allowances for travel and entertaining.
Some examples of items that are taxable are; Gym membership and private medical insurance where this is paid for by the employer. Company car where the cost of the benefit is based on the list price (not the actual price) multiplied by a percentage which is determined by the level of CO2 emissions, Interest free loans from the company to director where the balance exceeds £10,000.
In contrast, there are some expenses and benefits that are not normally taxable under the above provisions. These include; annual parties or similar which are open to all staff and which cost no more than £150 per head, Mobile telephones where the line rental and bills are paid directly by the employer, annual subscriptions paid to certain approved professional bodies where they are relevant to the duties of employment and travel for business purposes with reimbursed mileage at the agreed Mileage Allowance payment of 45 pence per mile.
The penalties for failure to submit a required P11D return on time can be £100 per 50 employees for each month or part of a month that the return is late. If an incorrect P11D return is made, they may face penalties up to £3,000.