It's P11D time: are you reporting all your Car Benefits?

It's that time again! 6th July 2023 marks the filing deadline for 2022-23 P11Ds. You must complete and file a P11D return in respect of each of your employees who have been in receipt of taxable benefits and expenses. Complete form P11Db: the employer's National Insurance declaration. There are special rules for 'Payrolled benefits' and HMRC is concerned about some underreporting of Car Benefits.

• From 6 April 2023 forms P11D and P11D(b) should be submitted electronically. 
• Electronic submission must be via the PAYE online service for Employers or Agents or via HMRC-recognised third-party software. 
• The deadline for payment of Class 1A NICs is 19 July, or 22 July if paid electronically

New statistics from HMRC compare company Car benefits for 2021-22 to earlier years reveal that there has been a slow decline in the value of car benefit tax charge of just 14.5% per year for each of the last two years. They also indicate that:

• There is a slow uptake by employers of greener Low emissions vehicles and low taxable benefit alternatives.
• While most company car owners have moved away from ‘gas guzzlers’ (cars with CO₂ emissions in excess of 165 g/km), one-third of company cars are still fuelled by diesel.

HMRC says that it has concerns over considerable underreporting of voluntarily payrolled company cars distorting the figures. Payrolling of benefits has existed since 2016.

The government has been heavily criticised in recent years by lobby groups against climate change for its inability to implement tax policies that will steer people away from expenditure on high-carbon goods and services. It did announce in 2021 that it will be banning the sale of new conventional petrol and diesel cars and vans from 2030 and allowing only the sale of zero-emission vehicles from 2035.

Employers cite the cost and inconvenience of finding charging points as one reason not to update fleet cars.

Useful guides on this topic

P11Ds: Employers' checklist & top tips
Top Tips for employers on preparing form P11D together with a checklist.

Payrolling of benefits
The value of certain taxable Benefits In Kind can be included in taxable pay when calculating the PAYE deducted from payments of wages and salaries to employees.

Scale rates, bespoke rates and fixed-rate expenses
Use these to avoid the requirement of further reporting.

Tax-free benefits and perks
What are the top tax-free benefits or 'perks' that can be used to incentivise your staff? How should you structure them?

External links

HMRC Benefit in Kind statistics

Green Alliance: Accelerating the electric vehicle revolution