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.
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.
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.
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.