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Some paid or reimbursed expenses are exempt and do not need to be reported.

The P11D guidance issued by HMRC states that form P11D box N should include ‘the total non-exempt expenses reimbursed on fares, hotels, meals and so on including travel between home and a permanent workplace for UK employments and employments performed wholly outside the UK’ (not included elsewhere on form P11D).

Exemptions for paid or reimbursed expenses

From 6 April 2016 all dispensations ceased to exist. Instead, some expenses will be within an exemption and will not need to be reported on form P11D or payroll. Where the employer is satisfied that all the expenses and/or benefits they provide would be fully covered by the expense exemption they do not need to show these on forms P11D or deduct tax if they payroll expenses. Similarly the employee need not disclose them in their tax return.

Common items that will be covered by the exemption include the following:

  • travel, including subsistence costs associated with business travel
  • business entertainment expenses
  • credit cards used for business
  • fees and subscriptions

The exemption does not apply to expenses or benefits that are paid or provided under a salary sacrifice agreement.

HMRC Booklet 480 chapters 8 to 10 have further details on this subject.

Also HMRC Booklet 490 provides detailed guidance on tax and NICs guide for employers relating to employee travel. In particular there is a ‘table of reporting requirements’ on page 63.

Article from ACCA In Practice