from our UK office
Webexpenses has a proud track record of helping businesses to take effective control of employee expenses. From our experience, the one area finance teams tend to fear most is HM Revenue and Customs (HMRC) compliance.
In this white paper, we answer the most common queries about tax compliance to help you safely navigate the complexities of HMRC legislation, including:
- Which expenses are covered by the HMRC exemption
- When is a P11D required
- Whether credit card slips can be used as proof of an expense
- When do travel expenses qualify for tax relief
- And more
Which expenses are covered by the HMRC exemption?
Exemptions were introduced in 2016 to replace the old dispensations system. It means that valid expenses paid or reimbursed by the employer do not have to be reported in their tax compliance check. This covers:
- Business travel and subsistence
- Business entertainment
- Professional fees and subscriptions
Expenses are not covered by the exemption if:
- Scale rates are not approved by HMRC
- They are paid via a salary sacrifice arrangement
When is a P11D required?
P11D forms are filled in by employers for annual reports on employee expense payments as well as employee benefits. They are designed to inform HMRC about taxable benefits in kind that are not included in the payroll or subject to PAYE deduction.
A P11D is needed for each employee you’ve provided with expenses or benefits that are not covered by the exemption. You don’t need to submit a P11D for employees if you pay tax on all their benefits via payroll.
Can credit card slips be used as proof of an expense?
No, they’re not usually deemed to be sufficient for a HMRC compliance check. A receipt is required to prove that a cost was incurred. This must be legible and include the date, cost, name of the supplier, and VAT number. A digital copy of a receipt is equally valid as a paper original as long as it provides the same information.
When do travel expenses qualify for tax relief?
To qualify for tax relief, expenses need to involve necessary travel, subsistence, and accommodation between:
- A permanent and temporary workplace
- A home and temporary workplace
- Two or more temporary workplaces
The travel details need to be recorded with reasonable care in a way that enables allowable and non-allowable components to be identified.
Qualifying expenses include:
- Airfares, taxes, trains, etc., for business travel
- Hotels and subsistence while away from normal workplace
- Business mileage, car parking, tolls, etc.