General and background information


When an employer purchases an item and then transfers it to an employee a taxable benefit will arise, if the employee does not pay the market value of the item at the date of transfer. Of course the argument starts when the taxman doesn’t agree with your market valuation.Therefore always try to obtain two proofs of valuation. This can be as simple as a printout from eBay of similar items.


There are 2 categories of assets set in the P11D Organiser system, either “company cars” or “other property or assets”


Cars

For cars transferred the amount chargeable to tax is the second hand value of the vehicle at the date of transfer to the employee less any amount paid by the employee.


Other items

When assets (other than cars), first applied as a benefit after 5 April 1980, are transferred by the employer to an employee (or to members of the employee’s family or household) the amount chargeable to tax on the employee is the higher of:

A. - The market value of the asset at the date of transfer,

    OR

B. - The market value of the asset when first applied as a benefit less any sums already taken into account in taxing benefits derived from the use of the asset.

    LESS

C. - Any amount paid by the employee for the acquisition of the asset.


Cycle to work scheme - Changes to end of scheme arrangements – Transfer of Ownership

The scheme works on the basis that an employee can hire a bike from their employer over a 12 or 18 month hire period, and pay for the benefit through a Salary Sacrifice arrangement.  At the end of the hire period, an employer may sell the bikes to employees at a fair market value at that time, though in accordance with scheme legislation there is no automatic right for the employee to purchase the bike at the end of the hire term. At the end of this period, the employee may wish to take ownership of the secondhand bicycle and the transfer of ownership at this point could give rise to a benefit in kind.  


HMRC have provided a set matrix of pre-determined values, which would not be challenged if adopted.  The percentage values are based on the value of the bike and safety accessories at the outset of the hire term and the age of the bike at the point at which a transfer of ownership may take place.


Age of cycle

Acceptable disposal value percentage.

Original price of the cycle less than £500

Original price £500+

1 year
18%
25%
18 Months
16%
21%
2 years
13%

17%

3 years
8%
12%
4 years
3%
7%
5 years
Negligible
2%
6 years & over

Negligible

Negligible


Further information on the transfer of bicycle to employees from the HMRC employment income manual:-
Particular benefits: bicycles: transfer of bicycle to employee

As explained at EIM21664, employers commonly offer loans of cycles to employees under salary sacrifice arrangements. It is not unusual for a cycle to be sold to an employee after the end of the loan period.


If ownership of the cycle is transferred to an employee after a period of use as a benefit during which the exemption described in EIM21664 applied, this may fall within the meaning of “earnings” in section 62 ITEPA 2003 (see EIM00540). To the extent that section 62 does not apply, the transfer will be a benefit and the cost of that benefit is the market value at the date of transfer. This is different from the “special rule” for working out the taxable amount under the benefits code when assets are transferred after a period of use as a benefit (EIM21650).


Even when the tax charge arises under section 62 the liability is returned on form P11d because the charge arises on a non-monetary asset, rather than being collected through PAYE. Only Class 1A NICs will be due.


If a cycle is transferred to an employee at a nominal value (say 5 to 10% of the original retail price), then if the market value is higher, the employee will be taxable on the difference. See EIM21667a for details of an optional simplified approach to valuing cycles sold after the end of a loan/ salary sacrifice period.


The exemption from tax and NICs for loaned or hired cycles only applies where there is no transfer of the property in the cycle or equipment in question. This means that the exemption will cease to apply if ownership is transferred to an employee. Similarly, the exemption will not apply if any agreement builds in from the outset an automatic transfer of ownership to the employee at the end of the hire period.



Information required

The cost or market value of the assets at the date of transfer, the amount of any payment by the employee or from which tax has already been deducted, with the difference being the cash equivalent.


Measure of benefit

The benefit is normally the market value, less any payment made by the director or employee for the asset. Market value is defined as the price that it might reasonably have been expected to fetch in a sale on the open market. The notes below expand this definition to cover circumstances where this does not strictly apply.


Practical Points

  1. If the asset is purchased by the employer and is immediately transferred to the director, employee or member of his family or household, the higher of market value or cost determines the benefit. It is important that the employer actually purchases the asset and does not simply settle an employee’s pecuniary liability, as this would create a liability to Class 1 NICs and fall to be reported in section B.
  2. An asset transferred, used or depreciated since purchase is taxable on its market value.
  3. If the asset (except a car, van, bicycle or cyclist’s safety equipment or property that has been used as living accommodation) is firstly loaned and then transferred to the employee, the benefit is calculated by first taking the market value when the asset was first provided as a benefit. Then deduct the amount that has been assessed as a benefit in earlier years, the result giving the assessable amount unless the market value at the time of transfer is greater.
  4. For those assets excluded above which have previously been made available as a benefit, including exempt bicycles, you should use the market value at date of transfer.
  5. Any amount paid by the employee is deducted from the cost or market value to arrive at the cash equivalent.
  6. Tax is deductible under PAYE from awards of readily convertible assets. These include assets tradable on recognised investment exchanges or for which trading arrangements either exist or may come into existence. Such awards are subject to Class 1 NICs, not Class 1A NICs. Awards of readily convertible assets are not reportable in Form P11D (CWG 5 Appendix 1)



P11D Form: Section A



P9D Form: Section A(2) (Obsolete after 2015/16 Tax year)


P11D Guide: Section A

Assets transferred (cars, property, goods or other assets)

Enter either:

  • the market value of the asset at the date of transfer
  • a figure based on the cost to you

Read chapter 6 of the 480 expenses and benefits guide for further information.


Additional HMRC Documentation and external help 

Click the links below to go directly to the HMRC website to download or view the PDF or help files listed below.


HMRC P11D Guide

https://www.gov.uk/government/publications/paye-end-of-year-expenses-and-benefits-p11d-guide


HMRC Booklet 480 (Chapter 6) 

https://www.gov.uk/government/publications/480-expenses-and-benefits-a-tax-guide 


Asset transferred to a director or employee or a member of his or her family or household after the asset has depreciated or been used

Where an employee (or member of the employee’s family or household) benefits from the transfer of an asset (other than a car, van, exempt bicycle or cyclist’s safety equipment – see Chapter 5 – or living accommodation) at less than its market value, the benefit for tax purposes is the difference between the sum (if any) paid for the asset by the employee and so on and the higher of:


• the market value of the asset as at the date of transfer, or

• the market value of the asset when first applied as a benefit minus any sums already taken into account in taxing benefits derived from the use of that asset


Where an asset not within the preceding paragraph (for example, a car, or something which had never been applied as a benefit) is similarly transferred and the asset has been used or has depreciated in value since its production or acquisition by the person transferring it, tax is charged on the market value of the asset at the time of transfer to the employee minus any amount paid for it by the employee.


Manual data entry

Benefit and expenses records are assigned to an employee record within the system. The software will require a certain amount of information in order to calculate a benefit in kind value. The information required to be entered is particular to each section of the P11D.  


How to manually enter a Section A benefit:

 

Step 1
Select the employee record to that you wish to assign the benefit to

Step 2

Select benefit section “Section A” from the drop-down benefit selector – or click on the “Section A” icon at the top of the screen.

Step 3

Click the ADD button.

Step 4

Select from the list of existing benefit descriptions for this P11D section and click OK - or click the ADD button to enter a new benefit description of your own.


Step 5

The following data points are used to calculate the benefit in kind for this benefit type:


Market value of asset when first provided as benefit
Total amount charged to tax since first provided
Date of transfer

Second hand value at date of transfer

Amount paid by employee for the asset




Having entered the necessary details of the benefit, click on SAVE to save the record.




Importing Data 


File Type

The system can import data in numerous file types but a CSV (comma separated values) file type is recommended; it removes the complexities of any existing Excel formulas and formatting etc.


Header row

The header row is used by the system to automatically select the correct import target field to match for import. It is therefore recommended to use the exact naming convention so as to remove the need to have to manually select the appropriate system target field.  Click the link to download the software Import header row TEMPLATES  


Square block of data

Remove all data above header row, below the last record and after the last column of data - this helps with interpreting the data correctly.


Consistent data

The final column of data should contain a consistent entry for every row of information i.e. a value in every cell of the spreadsheet. This ensures that the software moves to the next employee record consistently at the correct time. It is recommended to place either something like a payroll number or simply paste a column of ‘xxx’ in the final column to provide an import record end.


Formatting

The format of some of the data to be imported is very important – the following pages clearly show what data and formats the software is expecting to import.


Column Order

The column order in the spreadsheet is not important, as the P11D Organiser will automatically map as many fields as it can using the header row names, and will remember the settings made during the import process for future use (system assumes you will be using that format next time around).


Key field

ALL data imported must contain a Key field – NI Number or Payroll Number for employees and Registration Number for cars – this is necessary to ensure that data can be married up correctly. Key fields are clearly highlighted in the table.


Compulsory Fields

Certain fields must be included in order for the import routine to correctly allocate/calculate benefits. These “Compulsory” fields are clearly highlighted in the tables.


Optional Data

The remainder of data that can be imported is categorized as optional and is displayed in standard type.


Data Fields table - Section A

Information
P11D Field code
Type
Field Length
Inclusion
Formatting
Value Of Benefit
CASHEQV

Numeric

10

Compulsory


Value Of Cash Foregone (OpRA)
CASHFGONE

Numeric

10

Optional


Benefit Date
DATE

Date

8

Optional

dd/mm/yyyy

Description of Benefit
DESCRIPTIO

Character

50

Compulsory


Amount Made Good
MADEGOOD

Numeric

10

Optional


Market Value when transferred
MKTVALUE

Numeric

10

Optional


NI Number
NI_NUMBER

Character

10

Key field


Additional description
NOTES

Character

30

Optional


Payroll Number
PAYROLL

Character

20

Key field


Payrolled value
PAYROLLED

Numeric

10

Optional




Step by step guide to importing data


STEP 1 – IMPORT

Select FILE > IMPORT WIZARD (or use the system IMPORT icon to go to the Import wizard)



STEP 2 – ROUTINE

Select the Import routine to run: A Assets transferred and click NEXT



STEP 3 - SELECT SOURCE FOLDER TO USE

Navigate to and select the location of the folder that contains the import .CSV file to be used in the import process 



The system will also display all other spreadsheet import files that are saved in the the same directory.


STEP 4 – MAP SOURCE DATA TO TARGET FIELD

Using the import template provided, the system will automatically configure and select the matching target field for the source data on the source CSV file (header row displayed on the left will match the correct target field displayed on the right)  Click NEXT

TIP: Use the "Reconfigure P11D Organiser target field name" button to assist with this "mapping" process.


NOTE: If you are not using the template then you will need to manually select the correct target fields using the “TARGET FIELD SELECTION” button. (These will initially be un-selected and displayed as ** EXCLUDED ** in the TARGET FIELD column) -




STEP 5 – TARGET FIELD & DATA VALIDATION

The system will display the data in a table. A key ID selection of must be made between either PAYROLL number or NI Number (unique reference for employee)

 

GREEN entries are EXISTING benefit records in the system benefit database that will be updated/replaced.(recognized by their DESCRIPTION and PAYROLL)  

WHITE entries are NEW Benefit records being added to the system benefit database (recognized by their PAYROLL number and DESCRIPTION)

YELLOW entries are NEW benefit records/categories being added the system benefit database. (not recognized by their DESCRIPTION) 

PURPLE entries are NEW employees so cannot be assigned benefits during this import process (not recognized by their PAYROLL number)



Clicking the NEXT button, the system will begin to validate the data and any records failing validation rules will be referred to in a series of pop-up messages. Any resulting invalid records will be removed and saved to an error log file at the end of the import process.



STEP 6 – BENEFIT DESCRIPTION CATEGORIES & PROFILE VIEW

The system now displays the total number of records being imported for each displayed description and provides an opportunity to Add, Edit or Exclude the benefit records displayed.



Any NEW benefit categories (not recognized by DESCRIPTION) will need to be added & defined - click Add to be do this to be able to continue to the next stage of the import process.




STEP 7 - CONFIRM & SAVE BENEFIT PROFILE 

The new benefit description will be added and saved, additional properties such as Class 1A NIC settings or pay-rolled benefits can be defined here, once complete click OK  save and proceed.



STEP 8 - BENEFIT DESCRIPTIONS SUMMARY

The system displays a summary of the total number or records for each benefit description in the import. If you are happy with using the revised benefit categories and total of entries

as shown, click Next 



STEP 9 – COMMIT DATA CHANGE

The system will now commit the data & create the benefit records. The system will confirm the numbers of records to be added & updated and the total number of records from the source file.  

NOTE - Backup DATAFolder is recommended as it gives you a restore point prior to committing the changes being made during the import.


CLICK FINISH



STEP 10 – EXIT IMPORT ROUTINE OR DEAL WITH ERRORS 

EXIT IMPORT

If your file contained no errors that need to be re-imported, simply click CANCEL to exit from the import wizard and return to the main P11D Organiser system.



ERRORS HANDLING 

Any records removed during the validation process will be saved as an “Error file”
These error files can then be viewed and saved in MS EXCEL. Having made the necessary corrections and changes to the invalid records contained in the "error file" it can be used as a new source file to import the corrected records and complete the import for ALL RECORDS (initial load plus the subsequent "fixed" error records)


If your file contained no errors that need to be re-imported, simply click CANCEL to exit from the import wizard and return to the main P11D Organiser system.



If your file contained no errors that need to be re-imported, simply click CANCEL to exit from the import wizard and return to the main P11D Organiser system.