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Improving the P11D Process

Improving the P11D Process. Paul Rains MIPP Transact HR Ltd. 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.

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Improving the P11D Process

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  1. Improving the P11D Process Paul Rains MIPP Transact HR Ltd Transact HR Ltd www.transacthr.com

  2. 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. Transact HR Ltd www.transacthr.com

  3. Is this your P11D Process? Transact HR Ltd www.transacthr.com

  4. A Typical P11D Process • Involves the collection of data from various sources in various formats from. • Payroll • Accounts Payable • Fleet • HR • Personal Assistant’s / Legal • Only carried out once a year Transact HR Ltd www.transacthr.com

  5. Typical Process Flow Private Medical HR system Company Car / Vans - Fleet System Fuel Cards / Telephone Accounts Business Mileage, Loans Contributions to cars Payroll System P11D system Accounting System HMR&C Transact HR Ltd www.transacthr.com

  6. 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. Transact HR Ltd www.transacthr.com

  7. P11D systems • Best of Breed • P11D Organiser from PAS • ERP systems • Oracle • SAP • Integrated Solutions • Team Spirit Transact HR Ltd www.transacthr.com

  8. Case Study RAC Motoring Services Transact HR Ltd www.transacthr.com

  9. How did PAS Ltd help the RAC? Transact HR Ltd www.transacthr.com

  10. RAC Benefit Profile Transact HR Ltd www.transacthr.com

  11. P11D Query Analysis Transact HR Ltd www.transacthr.com

  12. P11D Queries by Benefit Type Transact HR Ltd www.transacthr.com

  13. Reasons for BIK Issues Transact HR Ltd www.transacthr.com

  14. Reasons for Issues by Benefit Type Transact HR Ltd www.transacthr.com

  15. 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. Transact HR Ltd www.transacthr.com

  16. 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. Transact HR Ltd www.transacthr.com

  17. P11D Reporting Process Improvement Adopting a LEAN approach to Benefits in Kind and the P11D reporting process Transact HR Ltd www.transacthr.com

  18. 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 P11D’s to the self service module. • Pass the calculated benefit values to HMR&C by EDI or FBI. • Pass any Class 1A NIC values to the accounts system using an interface file. Transact HR Ltd www.transacthr.com

  19. Lean Process Flow Web Portal – ESS or MSS All BIK data HR / Payroll System P11D system HMR&C Accounting System Transact HR Ltd www.transacthr.com

  20. 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. Transact HR Ltd www.transacthr.com

  21. 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. Transact HR Ltd www.transacthr.com

  22. 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. Transact HR Ltd www.transacthr.com

  23. 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? Transact HR Ltd www.transacthr.com

  24. 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. Transact HR Ltd www.transacthr.com

  25. Improving the Reporting Process • Email P11D’s to employees using a password protected PDF format. • Publish P11D’s to a web portal accessed using ESS. • File all EOY P11D data to HMR&C by EDI or Internet. • File in year Form P46(car) by EDI or internet. Transact HR Ltd www.transacthr.com

  26. 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. Transact HR Ltd www.transacthr.com

  27. Benefit Strategies Improving Employee Retention and Reducing your NIC liability Transact HR Ltd www.transacthr.com

  28. Salary Sacrifice Schemes • Salary is reduced on a permanent basis in exchange for benefits e.g. SMART pensions • Additional admin results in reducing salary’s. • ‘Win Win’ situation, both the employee and employer save on NIC’s. • Some options involve reducing the salary but then reporting the benefit of a BIK on the P11D. • Additional admin results in reducing salary’s 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. Transact HR Ltd www.transacthr.com

  29. 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. Transact HR Ltd www.transacthr.com

  30. The Future What lies ahead? Transact HR Ltd www.transacthr.com

  31. 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 (PSA’s) to be reported on the P11D? Transact HR Ltd www.transacthr.com

  32. Green Travel Reducing your Carbon Footprint Transact HR Ltd www.transacthr.com

  33. 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! Transact HR Ltd www.transacthr.com

  34. Any Questions? Paul Rains Director Transact HR Ltd Email paul.rains@transacthr.co.uk www.transacthr.com Transact HR Ltd www.transacthr.com

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