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From 6 April 2016 onwards, the old system has been simplified meaning that qualifying business expenses, which you pay out or reimburse to your employees, don’t need to be reported to HMRC on Form P11D.

If you believe an expense would be tax deductible you can reimburse the employee once they’ve produced a claim with the supporting receipts. But if it’s not a qualifying expense you must treat it as additional salary and process it through the payroll.

Some qualifying expenses are easy to spot. For example, a member of your team buys the stationery they need to do their job, you can reimburse them tax and NI free without a worry.

The rule for tax deductibility is based on ‘wholly, exclusively and necessarily’ in the performance of the employee’s duties. This means that if you, as an employer, require your employee to incur these costs as part of their duties, it is tax deductible. Accommodation and subsistence can be tricky, but if you require the employee to incur these costs (perhaps so they can make an early morning meeting which is a long distance away from where they normally work), they should be classed as tax deductible.

Business travel and expenses can be quite a minefield so should you have any queries please don’t hesitate to get in touch on 01782 279615.


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