Employers must accurately report the provision of living accommodation to HMRC through the following steps:

  1. P11D Form:
    • Employers need to complete the P11D form for each employee receiving living accommodation as a benefit. The P11D form is used to report any benefits and expenses provided to employees that are not included in their wages.
    • On the P11D form, employers should provide details of the accommodation, including the annual value, any additional charges, and the total taxable benefit after accounting for any employee contributions.
  2. Class 1A National Insurance Contributions (NICs):
    • Employers are also liable for Class 1A NICs on the taxable value of the living accommodation benefit. This must be calculated and paid separately.
    • Employers must complete a P11D(b) form to report and pay Class 1A NICs. The P11D(b) form summarizes the total benefits and expenses provided to employees and the corresponding Class 1A NICs due.
  3. Submission Deadlines:
    • The P11D forms must be submitted to HMRC by 6th July following the end of the tax year (which ends on 5th April).
    • The P11D(b) form and payment for Class 1A NICs are also due by 6th July following the end of the tax year.
  4. Providing Copies to Employees:
    • Employers must provide employees with copies of their P11D forms by 6th July. This allows employees to understand the value of the benefits they received and report this information on their personal tax returns if necessary.
  5. Payroll Reporting:
    • In some cases, employers may choose to payroll the benefits, meaning the value of the benefit is included in the employee’s payroll and taxed monthly. If this method is used, employers must register with HMRC before the start of the tax year.

Summary of Reporting Steps:

  1. Complete P11D forms for each employee receiving living accommodation.
  2. Complete the P11D(b) form to report and pay Class 1A NICs.
  3. Submit the P11D forms and P11D(b) form to HMRC by 6th July.
  4. Provide copies of the P11D forms to employees by 6th July.
  5. Consider payrolling the benefits if preferred, ensuring to register with HMRC in advance.

By following these steps, employers can ensure compliance with HMRC regulations and accurately report the provision of living accommodation to their employees.