P11D - leveraging benefits
It's two months to 19th July - the deadline for your P11D submissions, listing all your employees' benefits.
This isn't an optional declaration - if any of your employees get any benefits in addition to their salary, they must be reported.
This includes benefits such as company cars, medical insurance or private healthcare, creche facilities, gym membership, any additional allowances for travel, food or rent. These - and other benefits - all count as part of the employee's remuneration and are, therefore, taxable.
All benefits are subject to the class 1A National Insurance rate. The bad news is that this has recently increased from 13.8% to 15.05% - and this rate will apply to all items listed on each employee's P11D.
Getting the best benefits
The best benefits from a tax perspective are 'green' cars. Whether you choose to give your employees a 100% electric car or a hybrid electric/petrol car, there are tax benefits for both employer and employee.
The company will get tax relief on all vehicles that run completely or in part on sustainable energy. For new fully-electric cars its possible to get 100% of the vehicle cost as a first-year allowance against your taxable profits. For hybrid cars there are a number of different bands based on emissions and electric range. Basically, the more electric miles the vehicle covers, the lower the taxable benefit will be.
For instance, if a hybrid car can do more than 40 electric miles with emissions of less than 50 grams of CO2 per kilometre, the taxable benefit will be at a level that even an owner manager of his own limited company might be able to benefit from. There are even lower bands for longer distances (i.e. more than 70 Km), but currently very few models that can achieve the distances, and they tend to cost much more.
To ensure you're making the right choice when you purchase a new vehicle, it's sensible to get advice from your accountant.
For the employee, they also benefit with significantly lower taxable benefit for electric vehicles. That means happy employees, and a reduced tax bill - definitely a win-win.
Don't wait until the last minute before you put together your P11D benefit lists - and get professional advice to ensure you're claiming all the breaks you can.