P11D Benefits – 2016/17

Do you have a Limited Company and are currently an employee of that Limited Company? If you are a director of a Limited Company and receiving a salary, you will be an employee. As we have now approached the end of the tax year for 2016/17, we will now be able to finalise the calculations for your P11D Benefit forms for the last tax year ending 5th April 2017.
If you have expenses which are a mixture of both business and personal use, we will be able to claim these as company expenses, as long as the expenses are detailed on your P11D for the tax year.
This can be a good way to reduce the amount you need to withdraw from your company, as instead of having to pay for these personally, the expenses can be accounted for as an allowable company expense. Otherwise, these expenses are classed as dividends and will cause you to incur additional personal tax.
For example if you are paying for your mobile bills personally and they are around £100 per month, totalling around £1,200 across the tax year, you would normally have to withdraw this amount from your company as a dividend in order to pay for the personal bills. As this amount is taxed personally in order for you to have £1,200 you would essentially need to withdraw £1,777 (including the personal tax of £1,200 x 32.5% which you will need to pay on top).
However, if we claimed for the £1,200 mobile bills through the company as an expense, this would instantly save you the £577 you would be paying on the dividends for the year. This would generate a personal tax payment on the P11D benefits of £240 though.
The employers Class 1a National Insurance due on the £1,200 mobile bills is £165.60, which does have to be paid by the Limited Company.
Although that appears to be costing the Limited Company, the mobile bills and the employers National Insurance payment then become tax deductible expenses.
Overall, the corporation tax you would be saving through the company would be £273.12 (which is £1,200 + £165.60 = £1,365.60 x 20%).
So, for this example you can see the outgoings are personal tax of £240 and employers NIC of £165.60.
However, if you didn’t choose to include the mobile bills through a P11D, you would be withdrawing an additional dividend of £1,777 across the year causing personal tax of £577, and you also wouldn’t be getting corporation tax relief for the £1,200 which would have been £240.
Looking just above, the total cost of outgoings for claiming the mobile bills would be £405.60 so overall you would actually be better off by £444.52 (£577+£273.12-£405.60) by claiming the mobile bills through the Limited Company.
For your specific industry, other expenses such as the following are allowable through a P11D:
• Spotify
• Lovefilm
• Netflix
• Cable bills
This is just among the handful of the many expenses we can claim on the P11D forms for the tax year and save you personal tax at rates of either 7.5% or even up to 32.5%.
If the expenses are not detailed on a P11D form, you will not be able to claim the amount against your corporation tax for the company accounting year.
Please send across all of your receipts and expenses up to 5th April 2017 as soon as possible, so we can ensure we have the P11D calculations ready to be submitted to HMRC by 6th July 2017.
If you have class 1a National Insurance to pay on the P11D benefits, this amount will be payable by 19th July 2017 by your Limited Company.
Don’t hesitate to contact us if you have any questions or queries regarding the types of expenses we can claim for you through the P11D benefit forms, remember there is no such thing as a silly question!