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Last updated: 27 May 2021
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COVID-19 - what should you be reporting in your P11DS?

P11Ds are due for submission in July. Here we consider some of the areas that might require closer attention this year.

COVID-19 has forced nearly all of us to change the way we work in one way or another, and with many employees being required to work from home, employers may have covered the cost of home office equipment, broadband and phone bills. As a result, there are implications that you must consider which has changed the taxable benefits in kind position for employees.

As we prepare P11D forms for the 2020/2021 tax year, here, we clarify what you need to be including in your P11Ds bearing in mind the temporary exemptions and reliefs that are applicable as a result of the pandemic.

About the author

Rakhee Chohan

+44 (0)20 7556 1443
chohanr@buzzacott.co.uk
LinkedIn

COVID-19 has forced nearly all of us to change the way we work in one way or another, and with many employees being required to work from home, employers may have covered the cost of home office equipment, broadband and phone bills. As a result, there are implications that you must consider which has changed the taxable benefits in kind position for employees.

As we prepare P11D forms for the 2020/2021 tax year, here, we clarify what you need to be including in your P11Ds bearing in mind the temporary exemptions and reliefs that are applicable as a result of the pandemic.

Home working equipment

Home working equipment

In May 2020, it was announced that a temporary tax and national insurance exemption would cover home office equipment purchased by employees and reimbursed by employers as a result of the pandemic. This was backdated to the start of lockdown on 16 March 2020, and will cover the period until the end of the 21/22 tax year.

To be eligible for this temporary exemption, you should be able to tick off the following conditions:

  • The home equipment provided was for the sole purpose of enabling homeworking as a result of COVID-19
  • It would be tax exempt if provided directly by the employer
  • Any private use of the reimbursed requirement is not significant

If you provided equipment to your employees to enable them to work from home during the pandemic, for example monitors and keyboard, etc., the following conditions must be met for the exemption to apply:

  • Equipment was provided to enable the employee to perform the duties of their employment
  • Any private use is insignificant

The equipment is however the property of the employer and should be returned to you. If you decide at a later date to give the equipment to the employee (perhaps because it isn’t needed in the office, for example), there’s a taxable benefit which you’d need to report in your P11D, even though the actual second hand value may be nominal.

Reimbursed additional home working expenses

Reimbursed additional home working expenses

If these expenses are within the HMRC scale rate of £6 per week for non-receipted expenses, no further reporting is necessary.

Commuting expenses

Commuting expenses

Home to work travel rules are complex, and there’s little change from previous rules. In most cases, travel costs between home and a permanent workplace are highly likely to be taxable. Additional costs associated with travel, such as car parking, congestion charges and taxis are also taxable during this period as normal.  

If you paid or reimbursed your employees travel to the office during the pandemic, you’ll need to report this as a taxable benefit, or consider reporting under a PAYE settlement agreement.

Trivial benefits

Trivial benefits

‘Trivial benefits’ are tax exempt. If the following conditions are met, you won’t need to report the benefit/s to HMRC. Examples of ‘trivial benefits’ could include small token gifts that you’ve provided your employees during the pandemic, such as sweet hampers and snack boxes etc. 

If the benefits fall outside of the below criteria, you’ll need to include them on the P11D or the tax/National Insurance can be settled via the PAYE Settlement Agreement (PSA) process.

  • It cost £50 or less to provide
  • It wasn’t cash or a cash voucher
  • It wasn’t a reward for employees’ work or performance
  • It wasn’t in the terms of their contract
Meal or meal vouchers

Meal or meal vouchers

If you provided meals for your employees during the home-working period there are certain tax, National Insurance and reporting obligations you need to be aware of. This is a complex area that’s often challenged, so we recommend you speak to your usual Buzzacott payroll team contact for further information and clarification on this. Learn more about our payroll services, or contact a member of our payroll team here.

Wellbeing benefits

Wellbeing benefits

With the increasing importance of wellbeing during this period, if you’ve provided wellbeing initiatives to support the physical and mental health of your employees, this doesn’t create a taxable benefit to your employees. Any additional welfare counselling services you may have provided for your employees covering issues such as stress, problems at work and ill health etc., are also non-reportable.

What does this mean for furloughed employees?

What does this mean for furloughed employees?

If you stopped providing benefits to employees during a period of furlough, the revised rates will need to be correctly reported on the P11D.

Mobile phone costs

Mobile phone costs

As your employees may not have had access to their office work phone, they may have used their mobile phones for work calls more during 2020/21. Where a mobile phone has been provided by you and the contract is between you and the supplier, no benefit will arise, and there are no reporting obligations.

If your employees have been using their personal mobile phone, here’s what’s taxable and what’s not:

  • Where an employee has been claiming for itemised business calls, texts and data only (and this is evidenced), the cost reimbursed is not taxable.
  • Where an employee has been claiming for their fixed call plan (say £30 all-inclusive calls, data, etc.), the cost will always be taxable through payroll.
  • Where an employee has been claiming for costs over and above the fixed call plan, if they can demonstrate that the additional cost relates to 100% business use, the cost reimbursed is not taxable.
  • Where there’s no justification for the costs being claimed, and so the business use and personal use cannot be determined, the total claim will be taxable through payroll.
Broadband

Broadband 

If an employee required a broadband connection to be installed as a result of needing to work from home during COVID-19, and you arranged this, the costs can be tax free. Meaning you don’t need to report it on your P11D. 

For employees that have an existing broadband connection, if it’s not possible to split the business use and personal use, any reimbursement you provide will give rise to a benefit in kind, and the whole payment will be taxable. As with mobile phones, if the employee can split their bill and claim only for the business use element, such as additional data requirements, a reimbursement can be made with no tax implications.

Do I need to apply for a new PSA?

Do I need to apply for a new PSA?

If new items on your PSA relate exclusively to COVID-19, a new application isn’t required. For example, if you wish to include commuting costs, you can request an update to the original agreement. 

And important to note that the deadlines remain the same – see all your key dates below.

Key dates to diarise 

Key action Deadline
Provide employees with statements of payrolled benefits for 2020/21 1 June 2021
Agree a PSA (or make changes to items covered under an existing PSA) for 2020/21 5 July 2021
Submit Forms P11D and P11D(b) for 2020/21 6 July 2021
Submit employment-related securities returns for 2020/21 and register new share plans 6 July 2021
Submit PSA computations for 2020/21  31 July 2021
Pay tax/Class 1B NIC for 2020/21 PSA by post 19 October 2021
Pay tax/Class 1B NIC for 2020/21 PSA electronically 22 October 2021
Register to payroll benefits to be provided during 2022/23 By 5 April 2022
Speak to an expert

Get in touch

As a result of the COVID-19 pandemic, there are a lot of complex rules to consider in relation to what needs to be reported on your P11D forms. And HMRC can issue penalties when P11Ds are filed late or inaccurately. So it’s important you get it right. 

If you’d like clarification and advice on determining if an item would be classed as a benefit in kind, or you need assistance preparing your P11Ds, please get in touch. 

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