Self Assessment tax return and P11D

db141414

Hi I need some advice on tax returns & P11Ds and the way they work.

Am I right in saying that P11D benefits will be taxed through PAYE code if you're employed through a company?

If you require a self assessment tax return (not paid through PAYE) you need to declare your P11D benefits and pay tax on it at the end of the year?

What if you require a self assessment tax return however have benefits in kind, from employment paid through PAYE? (would this have been deducted through my tax code or do i need to report my P11D benefits on my tax return again?

If I am talking nonsense, could someone advise me on the relation between P11D and self assessment tax returns.

Thanks for any advice

TheCyclingProgrammer

Your self assessment tax calculation and tax code are independent.

Your tax code is used to determine how much you should be taxed via PAYE. Different benefits in kind and expenses are treated differently. Some are treated as earnings and added to your pay, some are taxed by an adjustment in your tax code.

Your self assessment is used to assess your full tax liability for the year and so you need to input all of your income plus any expenses and benefits from your P11D. If it's just a single employment, you just enter the figures from your P60 and P11D.

Certain expense payments recorded on your P11D may be genuine business expenses that you can claim tax relief on - things like business travel expenses. You enter this plus any other available claims for relief on your tax return.

This is then used to calculate your tax for the year.

At this point, any tax you've already paid will be taken into account and you'll pay any balance. If you've been taxed on your benefits via your tax code, you won't be taxed twice.

Sometimes, due to timing differences in when the P11D is submitted and when you do your tax return, HMRC may adjust your tax code for expenses reported on your P11D that were for genuine business expenses like business travel - but they can't know this just from your P11D. So they adjust your tax code and get taxed, but you'll get it back again once you do your return and put your business expenses in and will show you've overpaid.

I run my own business and ALL of the expenses I used to report on my P11D were for genuine business expenses and every year without fail HMRC would adjust my tax code and I'd have to ring them and get them to change it back again. I have a dispensation now so don't have to report anything on my P11D!

zygurat789

Tax deducted via PAYE is only "on account" of your ultimate liability.
Many people with one job will have a liability of the amount deducted via PAYE so long as their code number is correct.
The code number is the personal allowance less items such as BiK and other income and plus allowable items such as mileage.
Those with complicated tax affairs require a tax return. This is a bare your sole to the taxman and includes all your income and any claims for allowances, thus calculating your total liability. Any tax paid via PAYE is then deducted and you are required to pay any due amount.
Does that help a bit?

db141414

Thank you for the replies guys, I think I'm understanding it a little better.

If you could answer these questions I think I'd understand it a lot better:

By submitting a P11D you must do a self assessment tax return to pay tax on any benefits (e.g. Medical insurance)?

When it comes to benefits in kind from my P11D, I am not taxed on it until I enter it in my tax return?

My employer must declare their expenses for me such as travel to overseas country for work on my P11d?

If I had medical insurance from 2 years ago not entered in my tax return for that, but submitted in my P11D, would my code have picked it up or do I need to declare this again?

Thanks again

TheCyclingProgrammer

No, when HMRC receive your P11D they will use the information on it to update your tax code and collect any tax you are owed that way.

If you incur genuine business expenses like business travel, your employer still has to report those on your P11D unless they have a dispensation. You can claim tax relief on this in your tax return. But if your employer has a dispensation and it isn't on your P11D you do not need to claim anything as you won't be taxed in the first place.

The reason you need to enter your P11D expenses on your return is to ensure your tax calculation is correct.