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Record Keeping of Expenses and Benefits

HMRC may want to inspect your record keeping of expense payments for employees. Check what files you should keep and the deadlines for submissions and payments.

Expense or Benefit Records You Must Keep

As an employer, you need to keep accurate records of:

  • The date, and the details, of all expense payments and benefits that you provide for your employees.
  • Information used to work out the amounts you submitted on the end-of-year forms (e.g. P11D and P11D(b)).
  • Payments that any of your employees contribute towards an expense or an employment related benefit in kind (BIK).

Note: You should always keep a record of any correspondence that you have with HM Revenue and Customs (HMRC).

Error-free record keeping is an important part of providing expenses and benefits to employees. The data needs to be correct and show that you ‘accurately’ reported your end-of-year forms.

You will need to keep them on file and available for three (3) years from the end of the tax year that they relate to.

An Example:

Suppose you reimburse the travel expenses for one of your employees. You would need to keep records of when it took place and why the employee needed to travel. Always try to get receipts to show to HM Revenue and Customs as evidence (if needed).

Note: can ask to see evidence of your accounting for each expense or benefit at the end of the tax year.

Deadlines for Submissions and Payments

  • The deadline for submitting P11D forms online to HMRC is the 6th of July following the end of the tax year.
  • The deadline for giving employees a copy of the information on the forms is the 6th of July.
  • The deadline for telling HMRC the total amount of Class 1A National Insurance owed on form P11D(b) is the 6th of July.
  • Payments of Class 1A National Insurance on expenses or benefits must reach HMRC by the 22nd of July (July 19th if paid by cheque).
  • Any PAYE Settlement Agreements to pay tax and Class 1B National Insurance must reach HMRC by the 22nd of October (October 19th if paid by cheque).
  • Payments of PAYE tax or Class 1 National Insurance owed on expenses or benefits should get paid monthly through payroll.

Note: Employers can get a penalty of £100 for every 50 employees for each month or part of a month that the P11D(b) is late. Making late payments to HMRC can also result in financial penalties and interest charges.

ALSO IN THIS SECTION

Reporting and Paying | Which forms to submit, how to pay, what to report, and how to correct an error.

Exemptions and dispensations | Check which routine employee expenses get an exemption from HMRC.

Keeping Records of Expenses and Benefits: Deadlines and Interest