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Grossing up expenses

The directors at my company want reimbursement of what would be taxable BiKs - for example repair bills to their privately owned cars - to be grossed up when they are reimbursed so that effectively the company is paying any personal tax liability.

Can this be done, and just the grossed up amount declared on P11D? Or should the gross amount be processed through the payroll?

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25th Jun 2009 11:55

Try a PSA
There have been many posts on PSAs. Do a search on AWeb.

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By Old Greying Accountant
25th Jun 2009 12:58

PSA?
see: http://www.hmrc.gov.uk/guidance/paye-settlements.htm

Are there any things that are excluded from a PSA?

Yes. Among other things, HMRC will not include in PSAs

cash payments – for example, ordinary wages, salaries and bonuses including those paid to casual employees
round sum expenses payments - for example, a lump sum you give employees to cover all the expenses they incurred during the year
shares, due to their complex nature
major benefits in kind provided on a regular basis for the exclusive use of individual employees - for example, a car provided for someone’s sole use, fuel for that car, provided accommodation or a beneficial loan
profits arising from various mileage payment schemes and other regular items arising in Employee Car Ownership Schemes.

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25th Jun 2009 14:00

How about just putting the payments through the payroll
as additional net pay. If you have a software program such as Sage there is a mechanism which will calculate the gross equivalent automatically when you enter payments coded as net pay.

The grossed up amounts should not be included in P11ds as part of the "benefit" is cash. The net to gross option is probably the easiest to manage and avoids having to fiddle around with figures to go on the P11ds.

Grossing up is horrendously expensive, though.

Paula Sparrow

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25th Jun 2009 14:42

Well done OGA
i was shooting from the hip, not a good idea, thanks for the detail.

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