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Client pays interviewees for a job interview

My client paid each employee for attending a full day interview (£150).

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My client paid interviewees for attending a job interview (£150).  they subsequently hired that person - does this amount need to go through payroll?  How should it be declared?

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By Catherine Newman
18th Jan 2022 13:57

I wouldn't have thought it was taxable as they aren't employees at that stage. It is reimbursement of expenses.

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By the_drookit_dug
18th Jan 2022 14:36

Not sure it is reimbursenent of expenses - perhaps more in the nature of compensation for giving up their time?

Not sure.

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By Catherine Newman
18th Jan 2022 17:14

That was my initial thinking too-an incentive to turn up and not waste time.

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By Catherine Newman
18th Jan 2022 17:17

That was my initial thinking too-an incentive to turn up and not waste time. My hunch is the accounting staff do not want to wade through train fares, coffee shop expenses, sandwich shop expenses so they pay £150. Win win all round.

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By SteveHa
18th Jan 2022 14:53

Wasn't there a tax case some time ago on this that found it was taxable as income from employment? I forget the name.

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By Michael Davies
19th Jan 2022 12:48

Don’t know,and may well be taxable on the “profit”; however can’t be PAYE as their not employees? Hardly a joining fee for future services ?

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By DJKL
18th Jan 2022 15:05

I thought it was only taxable re any part received in excess of the sum expended to attend/accommodation/subsistence costs etc, but that could be mere wishful thinking.

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By SteveHa
18th Jan 2022 15:12

I could be mis-remembering the tax case. It's going back a while, and I have no idea what to search for to find it.

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By Hugo Fair
18th Jan 2022 16:12

It would certainly be more common (although still a rarity overall) to offer to reimburse any direct expenses (based on receipts) - as otherwise it's hard to see any 'excess' being treated as anything other than a payment for the interviewee's time.

Where that leaves the tax treatment (in either scenario) is up in the air without more research than I've currently got time for ... but I'd be prepared to gamble on tax-free for expenses-only?

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By More unearned luck
18th Jan 2022 20:17

The facts are unclear.

Your headline has payments made to 'interviewees'
The subheading has payments made to 'employees'
And in the body of the question you have 'interviewees' (plural) and then in the same sentence 'that person' (singular) was hired.

You are unlikely to get a consensus of answers if you post ambiguous questions, and you are unlikely to be able to distinguish the wheat from the chaff. Nevertheless here are two answers that might or wheat or chaff. I have assumed that none of the candidates are internal:

If all interviewees were paid, then I think their profit is taxable as sundry income. How can it be employment income if they aren't and (all bar one) never become employees of the hirer? The client doesn't payroll the payment. I think that this is so even for the successful candidate, as presumably he/she is paid before being offered the job.

If only the successful candidate was paid then it does seem to be employment income and PAYE and NIC should be applied to it.

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Replying to More unearned luck:
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By Hugo Fair
18th Jan 2022 20:28

An admirable combination of relevant facts and reasonable assumptions ... which is not meant to be patronising - just an honest appreciation of marshalling it all.

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By ngaccounts
18th Jan 2022 22:39

Were they given a glass of water during the interview - if so likely to be considered business entertaining in my book & therefore disallowable.

Also likely the prospective employee will have to treat the refreshment as payment in kind (for their time) & thus taxable as income using market value & will not be able to offset actual expenses incurred. Costs associated with job searches being non tax deductible.

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