2022/23 Employee benefits and expenses 

As the end of the current tax year approaches, now is an appropriate time for employers to consider their 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).

Reporting employee benefits and expenses to HMRC

Forms P11D

When an employer provides an employee with a non-cash benefit in the tax year, the employer is required to report this to HMRC on Form P11D.  Certain benefits attract an employer Class 1A NIC liability which is reported on an employer declaration Form P11D(b). 

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%

PAYE Settlement Agreement (PSA)

A PSA allows employers to report and settle the employee’s tax liability arising on certain expenses and benefits provided to employees on a grossed-up basis.  Expenses and benefits that can be included on a PSA must be minor, irregular or impracticable attribute the actual cost to the employee.

For a PSA to be effective, the employer is required to have an agreement in place with HMRC which lists the expenses and benefits that employer wishes to include in the PSA.

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%.

What are the key filing and payment dates?

P11D 2022/23 key deadlines

The filing and payment deadlines for the 2022/23 tax year.

PSA 2022/23 key deadlines

The filing and payment deadlines for the 2022/23 tax year.