Reimbursed expenses on P11d forms

Employees (earning over £8,500 including benefits) and directors will be receiving copy p11d forms completed by the employer for benefits and expenses paid in the year to 5 April 2012. Expenses covered by a dispensation do not need to be included on the P11 d form (see below for more information on dispensations).

Where an individual’s P11d form includes reimbursed expenses then a claim should be made for any expenses that were incurred for the purposes of the business. The claim can be made separately to HMRC or as part of completing a self assessment tax return.

Claims for business expenses can only claimed where the expenses is wholly, exclusively and necessarily for business purposes.

The claim must be made in order to prevent tax being charged on the expenses. The claim may be made by letter to HMRC.

The tax charge will come about from a PAYE code being issued that show taxable benefits (including expenses) but no corresponding claim for business expenses. The claim for business expenses should result in a correct PAYE code.

Business expenses paid for by employee

Where expenses are incurred by an employee but not reimbursed by the company then tax relief can be claimed on these expenses either by letter if less than £1,500 or by using form P87  if over £1,000 but less than £2,500. HMRC will ask you to complete a tax return if claiming expenses exceeding £2,500.

Expenses cannot be claimed where the employer has reimbursed the expenses and has an agreed dispensation with HMRC not to report these expenses.

Dispensations

Employers should consider applying for a dispensation to HMRC where routine expense payments such as travelling and subsistence are reimbursed to employees.

This saves the employer time when completing the P11d forms and also saves the employee making any necessary expenses claims.  Please refer to our previous article for further information.    

Please contact us if you require any assistance with your forms or payment.