The following Employment Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
The main types of payment made to employees are pay, benefits and expenses. The guidance notes within this sub-topic deal with expense payments made by the employer as well as the tax treatment of expenses met by the employee.
Depending on the nature of the expenses, either met by the employer or reimbursed to the employee, there are reporting requirements to HMRC as well as potentially both tax and NIC liabilities on those amounts.
Due to the coronavirus (COVID-19) outbreak, new rules and guidance were introduced, including those in relation to expenses in specific circumstances such as homeworking ― see the Homeworking and other expenses and coronavirus (COVID-19) guidance note.
Typically, the most common types of expenses relate to items such as business travel and subsistence. However, there is a large range of expenses which employers reimburse to employees.
Each different type of expense attracts a tax and NIC treatment as well as an associated reporting requirement. A useful guide with details on the tax and NIC treatment as well as the reporting requirement for each expense is provided online at A to Z list of expenses and benefits.
Generally, all amounts provided to employees are taxable, but the employee may be able to claim a deduction in respect of expenses incurred, whether funded by the employer or not. If the amount of the deduction is the same as the amount paid by the employer, the expense payment is effectively non-taxable. There are detailed rules outlined in legislation and case law which determine whether an amount is deductible.
For employees, the general rule for the tax treatment of expenses is in ITEPA 2003, s 336. This, with examples, is discussed in detail in the Business expenses ― general rule guidance note.
The legislation includes specific rules on the tax treatment of certain expense types. The Travel expenses, Subsistence expenses, Incidental overnight expenses, Overseas business expenses, Fixed deductions for expenses and Round sum allowances
**Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason.
Access this article and thousands of others like it free for 7 days with a trial of TolleyGuidance.
Read full article
Already a subscriber? Login
IntroductionUK tax must be withheld on UK payments including:•interest•royalties•rental incomeWithholding tax may be reduced under double tax treaties (DTT) or European directives, both of which may be subject to making a formal claim.This guidance note outlines the rules for UK withholding tax, and
Maintenance payments are payments made by a taxpayer to their former or separated spouse for the maintenance of that former spouse or their children. To obtain any tax relief for maintenance payments, one of the couple must have been born before 5 April 1935 and the payments must be made by virtue
The corporate interest restriction (CIR) essentially limits the amount of interest expense a company can deduct from its taxable profits if the interest expense is over £2 million. The actual mechanics of the CIR calculation are highly complex (the legislation is over 150 pages long) and are
Expenditure of a capital nature is not allowed as a deduction when calculating trading profits. Expenditure of a revenue nature is allowable, provided there is no specific statutory rule prohibiting a deduction and the expenditure also satisfies the wholly and exclusively test. See the Wholly and
To view our latest tax guidance content, sign in to Tolley Guidance or register for a free trial.