Reporting expenses and benefits 2020-21
Employers who provided taxable expenses and benefits to employees during the 2020-21 tax year will need to report these to HMRC on a form P11D by 6 July 2021, unless the benefit or expense has been run through a payroll or is included within a PAYE Settlement Agreement.
Benefits covered by an exemption do not need to be included. Where taxable benefits have been provided, the employer must also file a form P11d(b) by 6 July 2021.
This is the employer’s declaration that all required P11Ds have been filed and it confirms the Class 1A National Insurance contributions due.
Examples of expenses and benefits reportable to HMRC include:
- Company cars
- Health insurance
- Travel and entertainment expenses
The taxable amount that is reportable to HMRC is usually the cash equivalent value of the benefit received.
In order to report the benefits to HMRC you can either use:
- Payroll software
- HMRC’s online services
- Paper forms
You must submit the P11d forms online to HMRC by 6 July 2021. Employees must be given a copy of their own form by the same date. The form P11D(b) must also be submitted by 6 July.
Class 1A National Insurance must be paid to HMRC by 19 July if you pay by cheque and 22 July if paid electronically.
Expenses covered by an exemption
You don’t have to report certain business expenses and benefits like:
- Business travel
- Phone bills
- Business entertainment expenses
- Uniform and tools for work
There are also a number of COVID-19 specific exemptions that apply for the 2020-21 tax year.
To qualify for an exemption, you must be either be:
- Paying a flat rate to your employee as part of their earnings – this must be either a benchmark rate or a special (‘bespoke’) rate approved by HMRC
- Paying back the employee’s actual costs
Please do let your client manager know if you think employee benefits apply to your company.
Hospitality – reduced rate of VAT
The government announced on 8 July 2020 that it intended to apply a temporary 5% reduced rate of VAT to certain supplies relating to hospitality, hotel and holiday accommodation and admission to certain attractions.
The reduced rate was initially introduced to last for a temporary period between 15 July 2020 and 12 January 2021. This period was subsequently extended to 31 March 2021.
The government announced in the Budget 2021 that the temporary reduced rate will be extended for a further six-month period at 5% until 30 September 2021.
From 1 October 2021 a new reduced rate of 12.5% will then be introduced which will end on 31 March 2022, when the standard rate of 20% will return.
In April we gained a new member of the team, Gemma Ayton. Gemma is a chartered certified accountant who joins Smooth as an accounts senior with a wealth of knowledge. We know Gemma will continue to provide the service you have come to expect from us here at Smooth and is a valuable addition to our team.
Towards the end of last year, Smooth Accounting opened a new office in Portsmouth at Lakeside North Harbour.
This new office has allowed us to expand the team so we can continue to offer you the best possible level of service. We have since made the decision to bring the team all under one roof, which we are really excited about after a year apart.
This does mean that our Fareham office will be closing permanently at the end of June 2021.
If you need us moving forwards, we can be found at: 1000 Lakeside, North Harbour, Western Rd, Cosham, Portsmouth PO6 3EZ.
Business Excellence Awards 2021 – We Are Shortlisted!
We are very excited to announce that Smooth has been officially shortlisted for the ‘Medium Business of the Year’ category for the Portsmouth Business Excellence Awards 2021. This is a prestigious event to celebrate the success of businesses all across the South Coast, held at the Portsmouth Guildhall.
The award summary:
“To recognise outstanding performance by a company having a workforce of 24 or fewer and which is based in or has a significant presence in The News circulation area. A clear vision and plans for the future, consideration of international markets, innovation and creativity and overcoming challenges.” – portsmouthbusinessexcellence.co.uk
Having won Start-up Business of the Year in 2018, we are delighted our company growth and success has been recognised by The Portsmouth News and we can’t wait to attend this year.