Hi,
I have a case where an employer is sending 2 employees abroad for 6 months and will be covering their travel and subsistence cost plus paying an incidental expenses of no more than £10 per night.
Should 1) Employer pay directly for travel and subsistence expenses (e.g by providing the employees with a corporate credit cards), or 2) the employee paying the expenses themselves and getting them reimbursed by the employer.
Reading the HRMC guide 490 it looks to me that option 2 is lighter on documentation as the empoyer will not be required to operate PAYE on the expenses, whereas if option 1 is chosen all incurred and rembursed expenses need to be reported on P11D and than relief claimed by the employees.
Am I reading the HMRC guide correctly?
Thanks
Nikolay
Replies (8)
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Hi
Here is my take on it;
As the place of work is a temporary workplace (<24 months) the costs of business travel/accommodation will be deductible for the employees. On first principles they should be reported on a P11D and a deduction claimed by the employees via self-assessment. The reporting requirement can be avoided by having a dispensation in place in advance.
PAYE does not need to be operated on reimbursements of genuine business expenses so no tax/NIC deducted from the reimbursements.
Cheers
D
Hi
I don't think option one is quite right in your last post. If the employer pays for the hotel and other allowable travel costs directly this should not been classed as employment income of the employees and there should be no PAYE/NIC. Your scenario involves the employer paying a business expense direct to a supplier - as the expense confers no personal benefit on the employee they have nothing to declare.
An equivalent scenario springs to mind - if an employer sends an employee on a training course and pays the course provider directly there is no PAYE/NIC to consider as the course is not a taxable benefit for the employee.
The difficulty if the employees are provided with credit cards is tracking the spend as non-personal or business.
Happy to stand corrected if I am off the mark here.
Cheers
D