P11Ds - Common Benefits

It will soon be time to complete P11D/P11D(b) form for the 2024/25 tax year.

As a reminder, the deadlines are:

• 6 July 2025 – Forms to be submitted to HMRC
• 22 July 2025 – Class 1A NIC to be paid to HMRC (19 July 2025 if paying by cheque)

1. Living Accommodation

If you provide living accommodation to an employee or an employee’s family member, there is a benefit in kind unless the job-related accommodation exemption applies.

The conditions of the exemption are as follows:

• It is necessary for the proper performance of the job;
• It is customary and for the better performance of the job;
• It is provided for special security arrangements.

Agricultural workers, who are employees of the business, would fall within the exemptions above on the basis that their accommodation is necessary for the proper performance of their job. However, to protect this exemption, it is important their contract of employment reflects they must live in accommodation to perform their duties.

Unfortunately, the first two exemptions do not apply if occupation is by a director who has a material interest in the company – a material interest is defined as being able to directly or indirectly control >5% of the company’s share capital.

If the property was transferred into the company at no cost, the BIK charge can be avoided. However, care would need to be taken with a change in occupation after 6 years of acquisition by the company, after which the market value rule will apply.

If employers also pay the living expenses for the property, there is an additional benefit in kind. However, it is worth noting that the job-related exemption also covers council tax and water.

2. Provision of Company Vehicles:

If an employer provides a vehicle to an employee for use on private journeys, a benefit in kind applies. The tax charge depends on the vehicle provided, a car or a van.

For tax purposes a van is a vehicle primarily constructed to carry goods. All other vehicles are cars for tax purposes.

The car benefit and van benefit are calculated differently, with the key points being:

Car benefits:

• Assessed based on the availability for private use rather than actual private use.
• Benefit calculated based on the list price when new and the CO2 emissions of the vehicle. Also, the zero emissions mileage range for hybrid vehicles.
• Additional accessories are added to the benefit value.
• Separate fuel benefit for non-electric cars based on a HMRC rate and the CO2 emissions.

Van benefits:

• Standard annual rates set by HMRC for van and van fuel benefits (2024/25 - £3,960 and £757).
• Commuting is not private use of a van.

Double cab pickups:

Previously double cab pickups have been treated as vans provided the vehicle payload exceeded 1 tonne. From April 2025, any new double cab pickups will be classified as cars.

There are some transitional rules and currently owned double cab pickups will still be classed as van for benefits until one of the following trigger points:

• April 2029;
• The date the vehicle is sold;
• The date the vehicle lease ends.

This is a big change and will make any current benefits significantly more expensive. Also, any vehicles not currently in charge under the van benefit rules may be brought into charge under the stricter car benefit rules.

Initially planned to take effect from April 2026, the mandatory payrolling of benefits in kind will be delayed until April 2027. Currently, it is only voluntary.

The tax and class 1A NIC will be collected on a real time basis throughout the tax year. Instead of completing a P11D form, the benefits total will be included on the P60 provided to the employee once the tax year has concluded. There will also be no need to complete a P11D(b) form.

The only exception to this is beneficial loans and accommodation benefits, where P11D/P11D(b) forms will still need to be completed.

HMRC are expecting to release further guidance on mandatory payrolling by the end of the year and we can provide more details at that point.

If you would like any further guidance on benefits in kind, please do get in touch.