Employer year end compliance reporting

As the tax year draws to a close, employers are required to report and pay employment taxes. This can be a complex process, involving a range of different reporting requirements and deadlines for employee benefits and expenses year-end compliance reporting. Employee benefits are reported to HMRC either on a form P11D or via a PAYE settlement agreement (PSA), plus there is other reporting to consider.

P11Ds

P11Ds are forms used by employers to report certain expenses and benefits that they provide to their employees such as company cars, private medical insurance, and certain types of accommodation.

Employers must provide employees with a copy of their P11D by 6 July following the end of the tax year. In addition, employers must submit a P11D(b) to HMRC by the same deadline. The P11D(b) is a summary of all the expenses and benefits that have been reported on P11Ds, and it is used to calculate the Class 1A national insurance contributions (NICs) that are due. Due to the introduction and repeal of the 1.25% increase to NIC rates in the tax year 2022/23, the blended rate at which employers pay Class 1A NICs is 14.53%

It is worth noting that if an employer has a PSA in place for certain expenses and benefits, they do not need to report these on P11Ds.

PAYE settlement agreements

A PAYE settlement agreement (PSA) is an agreement between an employer and HMRC that allows the employer to settle tax liabilities on behalf of their employees for certain expenses and benefits.

To use a PSA, employers must apply to HMRC before the end of the tax year. The deadline for applying for a PSA for the 2022/23 tax year is 5 April 2023. Once a PSA has been agreed, the employer must report the relevant expenses and benefits on their PSA return. The employer must pay any tax and national insurance owed under a PSA by 22 October after the tax year the PSA applies to (19 October if paying by post). Remember, that similar to forms P11D, the blended rate at which employer Class 1B NICs are due on the cost of the benefit provided and grossed-up tax is 14.53%.

Payrolling benefits

The process for payrolling employee benefits involves identifying which benefits will be payrolled, calculating the taxable value of each benefit, and adding this value to employees’ taxable pay. Employers must then ensure that tax and NICs are deducted correctly through the payroll.

The deadline for registering for payroll employee benefits is 5 April at the start of the tax year. Once registered, employers must payroll benefits throughout the tax year, and report the payrolled benefits on their full payment submission (FPS) each time they run their payroll.

Other reporting requirements

In addition to PSAs and P11Ds, there are a number of other reporting requirements that employers must fulfil at the end of the tax year. These include:

• Reporting payroll information to HMRC through real time information (RTI). This must be done on or before the date that employees are paid
• Paying any outstanding PAYE tax and national insurance contributions by 22 April (or 19 April if paying by cheque)
• Reporting any taxable expenses and benefits that have not been included in a PSA or P11D on the employee’s form P60. This must be provided to the employee by 31 May following the end of the tax year
• If you have short term business visitors from overseas and have an Appendix 4 in place, you must provide a report of all such visitors by 31 May
• Report any share transactions or approved share schemes to HMRC by 6 July

The end of the tax year can be a busy time for employers, as they are required to report and pay a range of employment taxes. PSAs and P11Ds are two key reporting requirements that must be fulfilled, but employers should also be aware of other deadlines and obligations. By staying on top of these requirements, employers can ensure that they are compliant with their tax obligations and avoid any potential penalties or fines.

Further reading

What is ERS year end reporting?
ERS year end reporting: What has to be reported?
ERS year end reporting: Registration process and deadlines