In some cases, an employee can avoid being taxed on a benefit if they ‘make good’ the value of the benefit by reimbursing their employer. There are strict time limits for doing this. All reimbursements of taxable non-payrolled benefits for 2023/24 must be made by 6 July 2024. Which aligns with the date for submitting the P11D forms. The dates for making good on payrolled benefits provided in 2023/24 are:
• 1 June 2024 for the value of vehicle fuel used
• 5 April 2024 for all other benefits.
The deadlines for making good do not apply to interest payable on beneficial loans and overdrawn directors’ loan accounts. Where such loans exceed £10,000 at any point in the tax year there is a taxable benefit if insufficient interest is paid. This benefit takes account of the loans outstanding throughout the year, not just the days when the balance was above £10,000. This taxable benefit can be avoided if interest at least equal to the Official Rate is reimbursed. As long as the borrower is legally obliged to pay interest. The Official Rate for 2023/24 is 2.25% p.a. Despite this exclusion from the reimbursement deadlines, most people should try to pay any interest due on a loan by the 6 July following the tax year. To avoid any doubt as to whether a benefit arises at the time the P11D form is being prepared.
Don’t miss the deadline for ‘making good’ any benefits you have received, if you want to avoid a tax charge.