When it comes to running a limited company—especially as a contractor or freelancer—it’s not just salaries that matter. The perks you (or your employees) receive on top of your regular pay can have tax implications, and that’s where Benefits in Kind and the P11D form come in.
They might sound like complicated terms, but we promise they’re easier to get your head around than you might think.
What is a Benefit in Kind (BIK)?
Put simply, a Benefit in Kind is any perk or extra provided by an employer that isn’t included in a salary but still holds some sort of value. That could be anything from a company car to private medical insurance, or even interest-free loans and gym memberships.
If the benefit gives an employee some sort of personal gain, and it’s provided because of their role in the business, HMRC will want to know about it—and they may want to tax it too.
Common Examples of BIKs
Some typical benefits you might come across as a director or employer include:
- Company cars (especially if there’s personal use involved)
- Private health insurance
- Director’s loans over £10,000 with no (or low) interest
- Assets made available for personal use (e.g. a laptop or mobile phone used beyond work purposes)
- Accommodation provided by the company
These kinds of benefits usually create a tax charge, either for the employee, the company, or both.
So, What’s a P11D?
The P11D is a form that employers must submit to HMRC each year to report any Benefits in Kind that have been given to employees or directors. It’s due by 6th July following the end of the tax year (which runs to 5th April), and a copy should also be given to the employee/director concerned.
It’s essentially HMRC’s way of making sure the right amount of tax and National Insurance is being paid when extra benefits are on the table.
Do I Need to Submit a P11D?
If your company has provided any taxable benefits during the year, then yes, a P11D needs to be submitted for each employee or director who received them. If no benefits were provided, you don’t need to file the form—but it’s good practice to let HMRC know with a “no benefits” declaration (especially if you’ve submitted them in previous years).
There’s also something called a P11D(b) form—this is used to declare the total amount of Class 1A National Insurance owed on all the benefits you’ve reported.
What Happens if I Don’t File?
Missing the deadline or filing incorrect information can result in penalties, so it’s not something to overlook. Interest and fines can build up quickly, especially if HMRC feels you’ve been careless.
Can I Just Pay Tax on Benefits Through Payroll?
Yes, you can! It’s called ‘payrolling benefits’, and it means the value of the benefit is taxed monthly through the payroll system instead of reporting it via a P11D. But you need to register for this with HMRC before the start of the tax year.
Need Help?
If you’re not sure whether a benefit needs reporting, or you want to make sure your P11Ds are submitted correctly and on time, it’s worth getting proper advice. The rules can be detailed, and mistakes can lead to unexpected tax bills. We’re always happy to talk through your situation and help you stay on top of your obligations.
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