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Travel costs to and from office reimbursed at fixed supplement to their salary

Due to a relocation of offices, travel costs to and from office, for all employees, will be reimbursed at fixed supplement to their salary.

What would be the implications of this in terms of payroll/ P11D - given that this might result in a slight difference between the amount reimbursed and the travel cost? 

Most employees will be traveling by train and bus.

Thanks in advance


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18th Jul 2012 17:17

Just include it as pay

Despite (or because of) the office move, the employees' travelling will still be non-allowable commuting, so any reimbursement will need to be processed through your payroll, so the profit element isn't really relevant.  It's essentiall just additional pay.

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By Lou-jo
18th Jul 2012 18:38

Thanks Steve. So are you saying it wouldn't make a difference if we reimbursed exact cost per each train ticket? Ie company/ employee will effectively be taxed on top of travel cost?

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18th Jul 2012 21:03


Assuming it's not just a temporary move, you're essentially giving them cash to cover their non-allowable commuting expenses.

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17th Aug 2012 00:09

further to that

Hi,in my previous company all expenses like oyster card etc were paid seperately from if i have paid £100 a month on oyster card to travel from home to work then they were paying me my salary and then pay me £100 in seperate BACS my travel expenses.

In new job they have told me that they will be paying my travel from home to work BUT they will put this through payroll!! that means that I will be taxed for it.

what is the right way? and why?but please steve explian to me very simple so I can understand.

Because in the second case that means that they are not really paying the full £100 of my travel,because through payroll this £100 will be taxed.

thank u and sorry for intruding!

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17th Aug 2012 10:14

It depends


What Steve said is entirely correct.

If an employer reimburses an employee for a non-tax-deductible expense, such home-to-work travel costs this counts as additional wages on which tax and National Insurance is due through the PAYE system.

If however an employer arranges and makes the purchase of say, a rail season ticket for home-to-work travel, directly from the rail company the tax and National Insurance will be charged under the benefit-in-kind system. Essentially this means:

the employer must report the expense on the annual benefits and expenses return form (P11D)after the end of the tax year the employer must pay National Insurance on the value of the expensethe employee must report the expense as income on their tax return (if they are required to complete one) and pay tax on it directly to HMRC

The bottom line is an employee is liable to pay tax on employer-paid-for home-to-work travel; it’s only the method of payment that differs.




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17th Aug 2012 10:09

@marialiatou Your new employer is correct

Home to work travel is not tax deductable. I suspect you "got away with it" before, because I am guessing your job involves travel during the course of the working day. Because you use an oyster card for both business travel and normal comuting it has been mixed together and you have erroneously claimed a tax deduction for it all. Your previus employer should have deducted tax for the portion relating to your comuting

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