ExamFinch.com My Study

Study guide

6.4 Payroll Forms, P11D Reporting & Payrolling Benefits

Practice this exam

AAT Level 3 Diploma in Accounting Q2022

Track your progress as you read

Finished sections get a check mark.

1 Chapter 1: VAT Legislation, Registration & Records

1.1 Scope of UK VAT & Supply Classification 1.2 Compulsory & Voluntary VAT Registration 1.3 VAT Deregistration, Tax Points & Invoicing 1.4 VAT Records, Retention & HMRC Powers of Inspection 1.5 Late Registration, HMRC Assessments & Failure-to-Notify Penalties

2 Chapter 2: Calculating Output Tax & Input Tax

2.1 Output Tax Calculations & Special Adjustments 2.2 Input Tax Recovery & Blocked Input Tax 2.3 Bad Debt Relief & Partial Exemption Overview 2.4 VAT Invoice Types, E-Invoicing & Advanced Tax Points 2.5 Imports, Exports & Postponed VAT Accounting

3 Chapter 3: VAT Special Accounting Schemes

3.1 Flat Rate Scheme for Small Businesses 3.2 Cash Accounting Scheme 3.3 Annual Accounting Scheme & Second-Hand Margin Schemes 3.4 Choosing, Joining & Withdrawing from VAT Schemes

4 Chapter 4: VAT Returns, Making Tax Digital, Deadlines & Penalties

4.1 Completing & Verifying the 9-Box VAT Return 4.2 Making Tax Digital (MTD) & Digital Record Keeping 4.3 HMRC Error Correction & Points-Based Penalty Regime 4.4 Extracting & Validating VAT Data from the Accounting System 4.5 Filing Frequency, Payment Methods & VAT Deadlines

5 Chapter 5: Principles of Payroll & Statutory Deductions

5.1 PAYE Income Tax & Tax Codes 5.2 National Insurance Contributions 5.3 Statutory Payments, Deductions & Payroll Documentation 5.4 Employer Registration, Payroll Records & HMRC Powers 5.5 Gross Pay to Net Pay: Calculation, Reconciliation & Payslips

6 Chapter 6: RTI, Internal Reporting & Professional Ethics

6.1 Real Time Information (RTI) Submissions 6.2 Internal Financial Reporting & Management Communication 6.3 Professional Ethics, Data Protection & Record Retention 6.4 Payroll Forms, P11D Reporting & Payrolling Benefits 6.5 Keeping Knowledge Current, Authorisation & Communicating Change

6.4 Payroll Forms, P11D Reporting & Payrolling Benefits

Key Takeaways Explain This Topic AI

A new starter without a P45 completes a starter checklist, which tells the employer which statement applies and therefore which tax code and student loan plan to operate.

Form P45 has parts 1, 1A, 2 and 3: part 1 goes to HMRC through the FPS, part 1A is kept by the employee, and parts 2 and 3 go to the new employer.

Form P60 must be given to every employee still employed on 5 April by 31 May following the end of the tax year.

Form P11D reports benefits in kind that have not been payrolled, and P11D(b) declares the employer's Class 1A liability; both are due by 6 July, with the Class 1A NIC payable by 22 July electronically.

Payrolling benefits taxes the benefit through the payroll in real time and removes the need for a P11D for those benefits, but the employer still files a P11D(b) and still pays Class 1A NIC.

Last updated: August 2026

6.4 Payroll Forms, P11D Reporting & Payrolling Benefits

The AAT scope of content lists the payroll forms explicitly: starter checklist, payslips, P45s, P60s, P11Ds and P11Dbs . It also asks for the requirement to produce and distribute forms within the required time period , and the difference between reporting expenses and benefits on a P11D and payrolling benefits and expenses . This section is the reference for all of that.

1. The Forms at a Glance

Form Purpose Who gets it Deadline

Starter checklist Captures a new employee's circumstances when no P45 is available Completed by employee, retained by employer Before the first payment

Payslip Itemised statement of pay and deductions Every employee, every pay period On or before payday

P45 Records pay and tax to the date of leaving Employee on leaving; parts 2 and 3 to the new employer On the leaving date

P60 End-of-year certificate of pay, tax and NIC Every employee employed on 5 April 31 May following the tax year end

  • P11D Reports benefits in kind not payrolled Employee and HMRC 6 July following the tax year end
  • P11D(b) Employer's declaration and Class 1A NIC return HMRC 6 July following the tax year end

And the payment that follows the P11D(b):

  • Payment Deadline
  • Class 1A NIC on benefits 22 July electronically (19 July if paying by post)
  • 2. The Starter Checklist

When a new employee arrives without a P45 — a first job, a return from a career break, or simply a lost form — the employer asks them to complete a starter checklist . It captures name, address, date of birth, National Insurance number, start date, student loan position, and, critically, which of three statements applies:

Statement Meaning Effect

A This is their first job since 6 April and they have had no other taxable income Standard cumulative code, normally 1257L

B This is now their only job, but they have had another job or taxable state benefit since 6 April Standard code on a week 1 / month 1 basis

C They have another job or receive a pension BR code — basic rate on all earnings, no personal allowance

The checklist is not sent to HMRC. It is retained by the employer as the evidence for the code operated, and the information feeds the first FPS. HMRC then issues a corrected code on a P6 notice if it disagrees.

⚠️ EXAM TRAP: The starter checklist replaced the old form P46. If a question refers to a P46, it is describing a pre-2013 process.

3. Form P45

A P45 is produced when an employee leaves. It shows the leaving date, the tax code in use, total pay to date and total tax to date for the tax year, plus student loan indicators.

  • Part Goes to Purpose
  • Part 1 HMRC Sent electronically as part of the FPS reporting the leaver
  • Part 1A The employee The employee's own copy, for their records and their tax return
  • Part 2 The new employer Retained by the new employer
  • Part 3 The new employer Completed and submitted to HMRC through the new employer's FPS

The P45 must be given to the employee on the leaving date , or as soon as reasonably practicable afterwards. An employer must not issue a P45 in advance of the leaving date, and must not give a duplicate — if a P45 is lost, the new employer uses a starter checklist instead.

4. Form P60

The P60 is a certificate of pay, tax and National Insurance for the tax year . It goes to every employee who was in employment on 5 April , and must be provided by 31 May following the year end. It can be issued on paper or electronically.

It shows total gross pay for the year, total PAYE deducted, employee NIC by earnings band, the final tax code, student loan deductions, and any statutory payments. An employee needs it to claim a tax refund, support a mortgage application, or complete a self assessment return.

An employee who left before 5 April gets a P45, not a P60.

5. Benefits in Kind: P11D or Payrolling?

Benefits in kind — company cars, private medical insurance, interest-free loans over £10,000, gym memberships — are taxable on the employee and attract Class 1A National Insurance payable by the employer at 15% for 2025/26. There are two ways to deal with them.

Route A: Report on a P11D

The employer does nothing during the year, then after the year end:

Files a P11D for each employee with reportable benefits, by 6 July .

Files a P11D(b) declaring the total Class 1A liability, by 6 July .

Pays the Class 1A NIC by 22 July (19 July by post).

HMRC collects the employee's income tax by adjusting their tax code in a later year, so the employee pays the tax up to two years after receiving the benefit.

Route B: Payroll the benefit

The employer registers with HMRC before the start of the tax year and then:

Adds the cash equivalent of the benefit, divided across the pay periods , to taxable pay each period.

Deducts the income tax through PAYE in real time , so the employee pays as they receive the benefit.

No P11D is needed for the payrolled benefits.

A P11D(b) is still required , and Class 1A NIC is still payable by the same deadlines. Payrolling changes when the income tax is collected, not the employer's NIC.

Employees must be given a written statement of the payrolled benefits by 1 June following the tax year end.

Comparison

  • P11D route Payrolling route
  • When income tax is collected Later, via a tax code adjustment In real time, through PAYE
  • P11D required Yes No , for the payrolled benefits
  • P11D(b) required Yes Yes
  • Class 1A NIC Payable by 22 July Payable by 22 July
  • Registration None Must register with HMRC before the tax year starts
  • Employee experience Surprise tax code changes and underpayments Smooth, predictable deductions

Direction of travel: HMRC has announced that payrolling of benefits in kind will become mandatory for most benefits, so the P11D route is being phased out over time. For this unit, know that both routes currently exist, know what changes between them, and know that Class 1A NIC and the P11D(b) survive in both .

Benefits that cannot be payrolled

A small number remain outside payrolling and still require a P11D — most notably employment-related loans and living accommodation provided to the employee.

6. Consequences of Missing the Deadlines

  • Failure Consequence
  • Payslip not provided on or before payday Employment tribunal claim by the employee
  • P60 not provided by 31 May Penalty, and the employee cannot evidence their tax position
  • P11D / P11D(b) filed after 6 July £100 per 50 employees per month of delay
  • Class 1A NIC paid after 22 July Late payment penalties and interest

P45 not issued on leaving The new employer must use a starter checklist, often putting the employee on an emergency code and causing an overpayment of tax

7. Worked Scenario

Scenario: Fenwick Design Ltd has 30 employees. For 2025/26 it provided private medical insurance costing £420 per employee to 10 staff, and one company car with a cash equivalent of £6,300. It has not registered to payroll benefits.

What must it do, and by when?

P11Ds for the 11 affected employees, reporting the medical insurance and the car benefit, filed with HMRC and copied to each employee by 6 July 2026 .

P11D(b) declaring the total Class 1A liability, by 6 July 2026 .

Total benefits: ( 10 × £ 420 ) + £ 6 , 300 = £ 4 , 200 + £ 6 , 300 = £ 10 , 500 (10 \times £420) + £6,300 = £4,200 + £6,300 = £10,500 ( 10 × £420 ) + £6 , 300 = £4 , 200 + £6 , 300 = £10 , 500

Class 1A NIC at 15%: £ 10 , 500 × 15 % = £ 1 , 575 £10,500 \times 15\% = \mathbf{£1,575} £10 , 500 × 15% = £1 , 575

Pay £1,575 to HMRC by 22 July 2026 electronically.

P60s for all 30 employees still employed on 5 April 2026, by 31 May 2026 .

If Fenwick wants to payroll these benefits for 2026/27 instead, it must register with HMRC before 6 April 2026 — it cannot start mid-year.