Does one or more of your employees benefit from the use of facilities provided by you? This could be a cheap loan or a company car?
It is well known that you as their employer will need to inform HMRC of the amount of these benefits following the end of the tax year.
National Insurance Charge
Employers new to this situation would commonly appreciate that these benefits will have an impact on the affected employees’ personal tax, but they may not appreciate that the sum total of all benefits provided – to all their employees – will create an additional employer National Insurance Charge (NIC).
The NIC charge is classified as Class 1A contributions and is 13.8% of the total benefits provided.
The Charge In Numbers
As an example:
You provide a company car to three employees (employees can include directors) and the taxable benefit is £4,000 for each car provided.
Then the total Class 1A NIC charge that the company will need to pay is £1,656 (£4000 x 3 x 13.8%).
Are You Risking A Penalty?
Compliance with the associated regulations that deal with benefits and assessment and payment of Class 1A NIC is set in stone. There are penalties for not submitting returns to HMRC on-time and penalties and interest if you are late in paying any Class 1a that may be due.
Existing clients that have been through this annual compliance hoop before will no doubt be aware of what needs to be done.
Help With Employee Benefit Forms
If you are a new employer and have provided taxable benefits, we can help you to prepare and submit the employee benefit forms (P11Ds) and the annual P11D(b) return that informs HMRC how much Class 1A you owe. Please call if you need assistance with this process.