P11D non taxable expenses / tax return

[ELBBUBKUNPS]

A friend is having an issue with her tax return / accountant and I'm not sure if the accountant is wrong or her work is wrong.

The friend buys office supplies for the company they work for, they also travel to clients so they get £ for her petrol to get to her clients, she also does some client enterainment. On her P11D I see,

-Travel and Subsistence
-Entertainment


Non of these are for the employees benefit they are all expenses they incurred performing there job, now I believe even though they are on the P11D, when the tax return was completed you could enter it in 2 boxes and it would offset so no tax incurred, however the first time the accountant did the return they did not do this and it showed tax owing as a result. She point out to her accountant this issue and they just came back and said "its on the P11D if they are company expenses they shouldnt be there and the P11D needs amending", which I thought was wrong, I stated it needs to be put on twice to offset but rather than doing that the next return they sent they totally removed the expenses, which I know will be an issue as the P11D wont match her return.

Is the accountant wrong in this case or is it the fact her employer has submitted the P11D with the expenses under Travel and Subsistence, Entertainment thats the issue and the P11D needs adjusting ?

[TheCyclingProgrammer]

Oh dear. If what you're saying is accurate then the accountants don't seem to have a clue. But I think something is getting lost in translation. This is such basic stuff. However you seem to have made some possibly incorrect assumptions about what tax relief she can get on these payments.

With some exceptions, most benefits and expense payments need to be reported on your P11D unless you have a dispensation. Some things that don't need reporting are things that are exempt from tax (like mileage payments for business travel) and things bought on your employers behalf, like stationary in your example.

So yes, the P11D should contain entries for client entertaining and travel and subsistence. P11D sounds correct to me.

Not entering expense payments on your self assessment will raise a flag as it will not match the P11D.

As you say, all expense payments reported on the P11D must be entered. You can the enter a claim for allowable business expenses which will reduce your taxable pay.

Travel and subsistence may be allowable assuming it was business travel or travel to a temporary workplace. Normally you'd claim 45p a mile up to the first 10k miles, then 20p. I'm not sure if you can get tax relief beyond this for fuel allowances if that's what she's received.

I don't think client entertaining is allowable so there will likely be tax due on these payments.

[xoggoth]

Slight caveat. Various things, including mileage allowances and personal Incidental expenses, have "no reporting requirements" only if the amount you claim does not exceed the stated limits.

Eg Mileage Allowance Payments:

You’re allowed to pay your employee a certain amount of MAPs each year without having to report them to HM Revenue and Customs (HMRC). This is called an ‘approved amount’.

https://www.gov.uk/expenses-and-bene.../rules-for-tax

For list of links to all expenses, including entertainment, see this link:
http://www.hmrc.gov.uk/payerti/exb/a-z/a/index.htm

As for office supplies, agree that as they are purchased for the company, even if paid for out of personal account initially, you don't need to declare those. P11D is for things that are potential benefits to employee.

[ELBBUBKUNPS]

Slight caveat. Various things, including mileage allowances and personal Incidental expenses, have "no reporting requirements" only if the amount you claim does not exceed the stated limits.

Eg Mileage Allowance Payments:


https://www.gov.uk/expenses-and-bene.../rules-for-tax

For list of links to all expenses, including entertainment, see this link:
http://www.hmrc.gov.uk/payerti/exb/a-z/a/index.htm

As for office supplies, agree that as they are purchased for the company, even if paid for out of personal account initially, you don't need to declare those. P11D is for things that are potential benefits to employee.

Thanks for replies, is the non reporting in terms of the tax return as the P11D shows expenses travel/sub and entertainment? I got a feeling its combination of issues possibly the P11D is incorrect as the expenses (office stationary) may have been gone under wrong heading as the person claiming them did it wrong.. and the accountant (though looking on there web site not really sure they are) is confused to, though they are pretty useless first cut of the return had loads of errors in. The office stuff would go on her work credit card then she would get the £ to pay it off should that type of set up appear on the P11D if so under what heading ?

[TheCyclingProgrammer]

Thanks for replies, is the non reporting in terms of the tax return as the P11D shows expenses travel/sub and entertainment? I got a feeling its combination of issues possibly the P11D is incorrect as the expenses (office stationary) may have been gone under wrong heading as the person claiming them did it wrong.. and the accountant (though looking on there web site not really sure they are) is confused to, though they are pretty useless first cut of the return had loads of errors in. The office stuff would go on her work credit card then she would get the £ to pay it off should that type of set up appear on the P11D if so under what heading ?

Stuff bought on the companies behalf normally wouldn't appear on the P11D but if she has been given a company credit card then this is usually reportable on the P11D under the credit cards section.

[ContrataxLtd]

Thanks for replies, is the non reporting in terms of the tax return as the P11D shows expenses travel/sub and entertainment? I got a feeling its combination of issues possibly the P11D is incorrect as the expenses (office stationary) may have been gone under wrong heading as the person claiming them did it wrong.. and the accountant (though looking on there web site not really sure they are) is confused to, though they are pretty useless first cut of the return had loads of errors in. The office stuff would go on her work credit card then she would get the £ to pay it off should that type of set up appear on the P11D if so under what heading ?

Generally, where the items have been paid on a company credit card (that was made available to an employee) the amounts need to be declared on the P11d, even if they are business expenses that wouldn't normally need reporting if they were paid for personally and reimbursed by the company. These are then declared as business expenses (provided they are genuine business expenses) on the individuals self assessment so that there is no resulting tax charge on the employee.

Martin
Contratax Ltd