Correcting mistakes on P11D and P11D(b) forms

Employers dealing with the 2023/24 P11D season, or correcting P11Ds for earlier tax years, should be aware that paper amendments are no longer allowed. It is now vital to get these forms correct the first time.

Unless an employer has registered for payroll benefits, annual forms P11D are required by employers to report taxable employee benefits and certain taxable expenses. A form P11D(b) is also required to report any Class 1A National Insurance contributions (NIC) due.

Where forms P11D and P11D(b) are incorrect (for example, reportable benefits are omitted, or incorrect figures are reported), there is a requirement to amend the forms and resubmit the corrected forms P11D to HMRC.

If the error is identified long after the tax year and after the point where any tax liability and NIC should have been paid, it may be appropriate to take a different course of action. Rather than submitting revised forms, the employer should consider a voluntary disclosure to HMRC instead, with a view to settling the position with HMRC (including any liabilities) via a ‘contract settlement’.

How are amendments to forms P11D dealt with?

Since 6 April 2023, forms P11D and P11D(b) must be submitted online, and paper amendments to these forms are no longer accepted by HMRC. 

HMRC now has an online system for reporting changes. This replaces the paper/postal system which previously applied. When corrections are required, it is no longer as simple as printing amended forms and posting them to HMRC. 

Are P11D mistakes common?

Mistakes on P11Ds are common for several reasons. Firstly, for larger employers, there may be a need to process substantial volumes of data within tight time constraints, which increases the likelihood of human or data errors. 

In addition, the tax and NIC rules surrounding employee benefits can be complex, resulting in misunderstandings about what needs to be reported.

How quickly should amendments be submitted?  

Although there is no specific timeline to submit an amendment, any identified mistakes should be rectified promptly by the employer to help mitigate HMRC penalties and interest charges.

If an employee has been given a P11D containing an error, they must also receive a corrected version and it should be communicated that the new P11D replaces the earlier one. 

The employee may need to report their taxable benefits on a self-assessment tax return. Where possible, the form P11D should also be amended in time for the employee to submit a correct personal tax return by the deadline.

If P11Ds are incorrect, additional Class 1A NIC may become payable. Forms P11D(b) will also need to be corrected and any additional Class 1A NIC should be paid to HMRC as soon as possible to mitigate HMRC interest charges and penalties.

Do penalties apply?

HMRC penalties can apply to late and incorrect forms P11D and P11D(b). 

For example, failure to submit a form P11D(b) by the 6 July deadline can result in a penalty of £100 per every 50 employees (or part of 50) per month, or part-month until payment is received. The maximum penalty for submitting an incorrect form P11D is £3k per form.

If the position is corrected via a contract settlement, a different penalty regime applies.

Should employers payroll benefits instead?

The current system of voluntarily payrolling benefits allows employers (who have registered) to subject the cash equivalent of certain taxable benefits to tax via the payroll in real time. This removes the obligation to report those benefits covered on forms P11D at the end of the tax year. 

If mistakes are made when payrolling benefits, there is a requirement to correct those mistakes. However, this is done via the PAYE system (for example, by amending a full payment submission) rather than amending forms P11D. Depending on the circumstances, there may also be a requirement to correct the P11D(b). 

From April 2026, the payrolling of benefits will be mandatory. It may be sensible for employers who are not already voluntarily registered to payroll benefits to register to do so and adapt to payrolling benefits before it becomes mandatory. The only opportunity to do this now is for the 2025/26 tax year, and employers can register to payroll benefits for that tax year on or before 5 April 2025 (although the earlier the registration is made, the better). 

What are the three key takeaways?

1. It is crucial for employers to ensure that they correctly report all appropriate taxable benefits on forms P11D and submit forms P11D and P11D(b) by the annual deadline of 6 July following the tax year-end.
2. Mistakes on these forms should be corrected quickly, using HMRC’s online service, and employees should be provided with updated forms. Penalties and interest charges could apply. In some cases, it may be more appropriate to make a voluntary disclosure and agree on a contract settlement with HMRC instead.
3. Payrolling of benefits is mandatory from April 2026. For employers who are not already using the service, voluntary payrolling in advance of this date might be sensible, although there is currently only one opportunity left to do so.

How we can help

We have extensive experience in helping employers meet their tax and NIC obligations regarding employee benefits in kind. We offer a wide range of employee benefit-related services to help employers optimise their compliance, mitigate risks, and save time, including a tailored annual P11D preparation service. If you would like to discuss this further, please contact Lee Knight, Susan Ball, or your usual RSM contact.