July 19 is the deadline for paying Class 1A National Contributions on work benefits

If you provide work benefits (also known as benefits in kind) to your employees, then it’s important to meet the deadline to pay Class 1A National Insurance contributions on those benefits.

The date is July 19 if you pay by post and July 22 if you pay electronically.

 What happens if I don’t meet the deadline?

The deadline relates to work benefits paid in the previous tax year and it’s important to meet the cut-off date, as you will need to pay interest and penalties if you are late with your payment. 

What are work benefits?

Work benefits (or benefits in kind) are the words used to describe any expenses that an employer repays to, or on behalf of their employee, which provide a direct personal benefit to the employee. 

HMRC defines a benefit in kind as anything of monetary value you provide to your employees that is not 'wholly, exclusively, and necessary' for them to perform the duties of their job. 

Some typical benefits in kind can include: 

• company cars and fuel

• voucher and discount schemes

• private medical insurance

• interest-free loans

• subscriptions and professional fees

• cycle to work schemes

• share options

• certain childcare vouchers. 

For a definitive list, please check with HMRC’s A to Z Guide to Expenses and Benefits.

Workplace benefits need to be reported to HMRC for employee tax purposes, as well as for NI purposes. 

Whilst employees pay personal tax on benefits in kind, they do not pay National Insurance – but there is an NI liability on the employer.

(However, it’s worth noting that employees do have to pay NI on benefits that are paid in cash, as these are treated as earnings. For example, HMRC explains that if an employer gives the employee a gift they could sell instead of keep, they would need to pay National Insurance on the value of the gift.)

When it comes to reporting workplace benefits, there are some exemptions available. Employers do not have to notify HMRC about routine employee expenses. So, you do not have to report business expenses and benefits such as: 

• business travel

• phone bills

• business entertainment expenses

• uniform and tools for work

To qualify for an exemption, you should contact HMRC. 

How can I improve the quality of my workplace benefits report to HMRC?

The accuracy of the returns is crucial as HMRC can apply penalties for incorrect returns, so careful collation of accurate data and preparation of reportable numbers is very important.

Expense management software can help you with the reconciliation of year end expenses. 

The Expend Mobile App allows employees and employers to create and manage expense claims, all via an easy to navigate app.  

Solutions like Expend enable you to capture and categorise expense claims in real time, and integrate the data with accounting packages such as Xero or QuickBooks. 

This secure, smart technology provides significant resource benefits, in terms of effort and cost savings across the working year.

It’s particularly beneficial when preparing for reports which need to be submitted to HMRC because it provides a stream of integrated data which can easily be used for tax and NI reporting.