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Expenses and Benefits for Employers

Most employers will be making some kind of expenses payments and benefits for their employees. Check out how employers should deal with employment related expenses and benefits in kind. Topics covered in this section include how to report and pay employee benefits in kind. Extra information explains how to keep proper records and the rules on exclusions and dispensations.

TAXABLE EXPENSES PAYMENTS : As an employer, are you providing any expenses or benefits to your employees (or directors)?

If so, you may need to report it to HM Revenue and Customs (HMRC). It may also be liable for tax and National Insurance (details below).

Common examples of expenses and benefits for employers to report are:

  • Childcare and health insurance
  • Company cars
  • Travel and entertainment expenses

Fringe benefits or ‘perks’ are indirect means of compensating workers above and beyond their normal wage. As an employer, you should understand how expenses and employee benefits work.

So, you can provide certain expenses and benefits to your employees and directors (extra to normal salary). But, UK tax legislation means such items are liable to income tax and to National Insurance contributions (NICs).

ALSO IN THIS SECTION

Reporting and Paying

The end of the tax year is the time for reporting expenses and benefits in kind (BIK) to HMRC. Check which forms to submit, how to pay tax on benefits through payroll, what to report, and how to correct an error.

Deadlines

It is important to meet the deadlines for submitting expenses and making the payments. A £100 penalty applies per 50 employees for late filing of P11D(b) forms.

Note: The rules on expenses and benefits for employers vary. The type of employment related expense payment or benefit you provide determines what you must report and pay. Check the list of expenses and benefits.

Keeping Records

HMRC may want to inspect your record keeping of expense payments for employees. Check what files you should keep and how long they need to be available for inspection by HM Revenue and Customs.

Exemptions and Dispensations

Routine employee exemptions on PAYE expenses and benefits have made it easier for employers to report. Check a list of expenses covered by exclusions and how to apply for an exemption.

Congestion Charges

Most employers cover the costs of congestion charges for their employees. But, there are certain tax and reporting obligations to be aware of when covering congestion charges for employees.

HMRC Expenses and Benefits for Employers in United Kingdom