Top tips in reducing your expenses bill
International expenses management specialist Concur has released a series of myth-busting whitepapers for businesses that need advice about expenses. This digest for our Business Tax Library summarises some of the key points.
According to Concur, the most common expenses ‘hotspots’ in the UK are driven by HMRC’s risk-based approach to compliance which focuses on areas where companies are lest likely to pay the correct amount of tax.
“Focus groups within HMRC exist to concentrate on these areas, to support companies of all sizes in their tax paying efforts. The smaller the business, the less likely there will be an expert on specific tax areas within the organisation,” said Matt Lewis, director of compliance at Concur.
This article highlights the myths that have grown up around what’s claimable on expenses in the UK and one of the most commonly asked about areas: travel expenses.
The full version of this article, available to logged-in AccountingWEB members, "busts" the following expenses myths:
- Myth: Paying expenses can supplement your salary
- Myth: You must keep original paper receipts to meet HMRC requirements
- Myth: all company cars are subject to taxation
- Myth: You can pay any mileage allowances you want
- Myth: You can reclaim VAT on all travel expenses
- Myth: Complying with HMRC guidelines is all you need to do
For more expenses advice, see:
- Concur whitepaper: What’s claimable on expenses in the UK
- Mythbusters: A short-cut to travel expenses in the UK
- Working from home tax checklist
- P11D: Annual expenses and benefits update
- Concur Suppliers' page
Continued...
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Company cars
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There are two classes of company cars where you pay absolutely no tax: pool cars and disability cars, provided they meet certain conditions. HMRC looks on providing cars to employees with a disability as a generosity, although if it is subject to private use, must be reported to HMRC
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I would technically disagree with this interpretation in 2 areas. Firstly, when is a "pool car" not a pool car? Answer - when it is only used by one employee or ordinarily used by one employee to the exclusion of others. This rules out any car that is used as a workhorse mainly by a particular individual whose job it may be to run errands or deliveries.
However, such a car would still be exempt if it can be proved it was not available for anyone's private use, which usually means making sure the car is not taken home at night or at weekends. So just because it is not technically a pool car, that does not mean you cannot claim exemption for it, but you do need to be careful about its "availability".
Secondly, disabled employees do not have a blanket exemption from the company car rules. True, they do enjoy certain concessions, such as home to work travel (provided the car has been adapted to their needs). Also, they are taxed on the value of the nearest manual equivalent if they can only drive an automatic car due to their disability.
Otherwise, good article.