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expenses and PAYE

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    expenses and PAYE

    Hi,

    Read all the 480, 490 related to expenses and came out all confused.
    Simple question, Do I deduct PAYE when I reimburse my employee( me) for travel expenses. And NIC's?

    I was told that if they are reimbursed through the payroll I need to deduct PAYE and employee can get relief when he submits his return. But i also read in 490 that employer does not have to operate PAYE on reimbursed travel expenses if they cover the actual cost of business travel.
    And what about other subsistence expenses like meals etc?

    Any help appreciated,

    #2
    No

    NAA but if they are legitimate business expenses (or one of the other things we are all allowed tax free like eye tests for VDU users etc) then they do not count as salary and no tax/NIC is due. However, you should declare them on your tax return in benefits box and also in allowable business expenses box so is no net tax. Subsistence expenses are ok for valid business trips.

    Comment


      #3
      What about travel to the clients site everyday for the contract for few months and lunch/dinner time meals?? Are these valid expenses to reimburse? with/without tax deducted?:\

      There was an example of an IT consultant in 490 which said it was ok. But just wanted to check.

      Comment


        #4
        Travel to/from contract and meals while staying away and travelling yes. Lunches in company canteen may be debatable, some accountants say it is, some say it isn't. Technically, according to the IRs own bulletin things it really hinges on whether you are having to spend extra by being there that you would not spend if you did not have the contract. Doubt IR will query relatively trivial amounts.

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          #5
          Re: Re: expenses and PAYE

          Don't bother running expenses through the payroll, it just adds complications. Technically, yes you can deduct PAYE and reclaim at the end of the year, but why bother - also most payroll software should be able to deal with non-taxable payments.

          Submit an expense claim form to your company every month with receipts, just like you would if you were a permie, and reimburse yourself with a cheque or BACS payment. Anything with a VAT receipt can have the VAT reclaimed by your Co. Even better get a company credit card and get the company to pay directly rather than reimbursing you (can't do this with mileage of course). Your accountant will tell you what needs to go on the P11D at the end of the year, but if you make sure you never, ever claim more than the IR limits this will be very easy and there's nothing to pay.

          Up until the time you come under the "two year rule" you should claim mileage at IR rate, other travel at cost (1st class is fine) all meals and drinks while at client/travelling on business, hotels, etc. If you stay overnight in the UK claim an additional £5 per night without receipts. At all times claim all mobile calls (as long as the mobile is in the name of the company), manuals, materials, hardware, staff entertainment

          Comment


            #6
            expenses of director

            this is for employees...but usually you do not want to ever be an employee of your own company.. as you would need a contract and thus fall under NMW. And you'll have to run PAYE and NIC.

            My understanding is that Directors can claim the same expenses, am I right?

            Sal.

            Comment


              #7
              Re: expenses of director

              You DO want to run PAYE to take advantage of the basic allowance. Pay exactly the basic allowance once a year and the paperwork is simple. No NICs to pay, but you STILL get the stamp, which means you can claim unemployment benefit should you ever need to.

              As a director NMW does not apply. Even if it did, the only person who could take actionis the employee!

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