Improving the P11D Process

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Improving the P11D Process

• Paul Rains MIPP
• Transact HR Ltd

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Agenda

• A typical process for Benefit in Kind
  Administration.
• Case Study PAS, P11D Organiser
• Improving the benefit in Kind administration and
  P11D reporting process
• Benefit Strategies.
• Future Considerations.
• Green Travel Initiatives.

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Is this your P11D Process?
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A Typical P11D Process

• Involves the collection of data from various
  sources in various formats from.
• Payroll
• Accounts Payable
• Fleet
• HR
• Personal Assistants / Legal
• Only carried out once a year

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Typical Process Flow
Company Car / Vans - Fleet System
Fuel Cards / Telephone Accounts
Private Medical HR system
Business Mileage, Loans
Contributions to cars Payroll System
P11D system
HMRC
Accounting System
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Typical Issues

• There is no single source responsible for all
  benefit in kind data. It has to be captured from
  various sources
• Managers / Employees do not alert the fleet
  company / team when Company Cars are returned at
  the end of the lease.
• Employees swap company cars without the employers
  knowledge.
• Medical cover levels are not changed due to
  lifestyle changes not being captured.
• Pool Cars are used but no one is told.
• Fuel cards are supplied but not recorded.

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P11D systems

• Best of Breed
• P11D Organiser from PAS
• ERP systems
• Oracle
• SAP
• Integrated Solutions
• Team Spirit

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Case Study

• RAC Motoring Services

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How did PAS Ltd help the RAC?
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RAC Benefit Profile
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P11D Query Analysis
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P11D Queries by Benefit Type
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Reasons for BIK Issues
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Reasons for Issues by Benefit Type
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Issues that needed addressing

• All BIK Data and people movements were only
  captured at yearly intervals. Issues that arose
  were often distant memories and could not be
  resolved easily.
• Vehicle movements were not always being captured
  and when captured often had overlapping dates.
• HR were not accurately maintaining the PMI data,
  dates overlapped and the incorrect level of cover
  was being applied.
• People reported not receiving their benefit
  statement for checking or if they did receive it
  had little time to notify us of the inaccuracies.

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How did PAS help the RAC

• Benefit data automatically aligned to start /
  leave dates.
• Option to import data of all vehicle movements
  from our own fleet management system on a monthly
  basis.
• The system validated data upon import to check
  for overlapping dates and missing information.
• Easy monthly import routine from our payroll
  system.
• Electronic filing
• Ability to email P11D benefit statements.
• Bespoke P11D report to print on our own payslip /
  P60 stationary.

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P11D Reporting Process Improvement

• Adopting a LEAN approach to Benefits in Kind and
  the P11D reporting process

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The Lean P11D process

• Capture all BIK data at source using a self
  service web portal.
• Capture the cash equivalent value of all BIK data
  in the HR payroll system even if it is just to
  capture costs.
• If the P11D module is not integrated with the
  payroll pass the BIK data and payroll / personal
  data to the P11D system using an interface file.
• Email or publish employees individual P11Ds to
  the self service module.
• Pass the calculated benefit values to HMRC by
  EDI or FBI.
• Pass any Class 1A NIC values to the accounts
  system using an interface file.

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Lean Process Flow
Web Portal ESS or MSS All BIK data
HR / Payroll System
P11D system
HMRC
Accounting System
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Improving the Collection of data

• All benefits in Kind should be defined on the
  Payroll system as a chargeable but not payable
  item.
• Capture benefit in kind movements at source as
  and when they occur.
• Helps with P46(car) reporting.
• The transfer of data to the P11D system every
  month.
• The Fleet management and P11D reporting should
  ideally be an integrated solution.

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New Joins

• Using MSS the line manager can allocate benefits
  to a new employee that are applicable to that
  role.
• The new join can select / order their company
  car, trading up or down if there is a user
  chooser scheme using ESS.
• They can also order using ESS a Fuel card if they
  wish and either opt to pay for private fuel or
  not.
• Using ESS the new join can select the level of
  medical cover they require.

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Changes

• New Job Role (Promotion) capture benefit changes
  from the line manager using MSS.
• Employee can apply for beneficial loans using
  ESS.
• Life style changes capture changes from the
  employee using ESS
• Cash for car / Trade up / down values capture
  changes from the employee using ESS
• Benefits must be retained during maternity leave.

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Leavers

• Line mangers terminate employees using MSS.
• Line Managers can de-hire company cars upon their
  return by the employee.
• Fuel Cards and other Benefits in kind related to
  employment can be automatically stopped.
• Benefit retained beyond notice period or during
  garden leave?

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Improving the accuracy of data

• Capture all data at source avoid paper trails.
• Validate all data input and ensure data that is
  required is defined as mandatory.
• If data has to transfer from system to system
  ensure it happens electronically without manual
  intervention.

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Improving the Reporting Process

• Email P11Ds to employees using a password
  protected PDF format.
• Publish P11Ds to a web portal accessed using
  ESS.
• File all EOY P11D data to HMRC by EDI or
  Internet.
• File in year Form P46(car) by EDI or internet.

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Accounting and Compliance

• If all BIK data is captured within the payroll
  application the costs of providing benefits can
  be allocated accurately and automatically to cost
  centres / budgets in the payroll costing extract.
  
• Class 1A NICs costs can be calculated by the P11D
  system and posted to the general ledger if cost
  centre is held on the P11D system.

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Benefit Strategies

• Improving Employee Retention and Reducing your
  NIC liability

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Salary Sacrifice Schemes

• Salary is reduced on a permanent basis in
  exchange for benefits e.g. SMART pensions
• Additional admin results in reducing salarys.
• Win Win situation, both the employee and
  employer save on NICs.
• Some options involve reducing the salary but then
  reporting the benefit of a BIK on the P11D.
• Additional admin results in reducing salarys and
  reporting additional benefit on P11D.
• Only the employee saves on NIC.
• Process needs to be driven by self service to be
  effective for the business.

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Flexible benefits

• Cafeteria approach, allowing employees to select
  from a menu of pre defined Benefits.
• Rules exist to what are perceived as maximums and
  minimum values.
• Often involves salary sacrifice options.
• Usually allowed to choose once a year or upon a
  lifestyle changing event.
• You must first understand what the employees
  Total remuneration package is
• Total Reward Statements help with employee
  retention.
• Process needs to be driven by self service to be
  cost effective for the business.

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The Future

• What lies ahead?

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Future Considerations

• Benefits in Kind via the payroll?
• Taxation at source means the employee is up to
  date with tax
• No retrospective tax codes changes and unpleasant
  shocks.
• Taxed Award schemes and PAYE Settlement
  Agreements (PSAs) to be reported on the P11D?

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Green Travel

• Reducing your Carbon Footprint

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Green Travel Initiatives

• Limit C02 emissions on Company Vehicles
• Encourage car sharing
• Travelling to work
• Travelling on business.
• Greater use of video conferencing, webinars and
  web based conferences such as gotomeeting
• Cycle Loans
• Free breakfasts!

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Any Questions?

• Paul Rains
• Director Transact HR Ltd
• Email paul.rains_at_transacthr.co.uk
• www.transacthr.com