Self-assessment: Expenses question

[TheCyclingProgrammer]

Rule of thumb:

* If you need to check the rules regarding your out of pocket expenses as an *employee* and the implications of claiming those back from YourCo, check the A-Z I posted first and for more detail check the Employee Information Manual and remember there are both tax and NI implications and the rules and legislation for each are slightly different: The benefits code: benefits and expenses payments: contents

* If you need to check the rules regarding genuine business expenses that YourCo incurs and whether or not they are tax deductible, then check the Business Information Manual (which applies to any business, including sole traders and partnerships): BIM40000 - Measuring the profits (specific rules & practices) - receipts & deductions: Contents (caveat: some of the rules outlined in the BIM only apply to self-employed individuals, such as use of home)

[Contreras]

I notice that the Personal self-assessment provides box 17 to account for expenses.

As a Company Director who was reimbursed in full by the company for all of my expenses (and paid 45p/mile for my mileage) am I correct in thinking that I do not complete this section?

For clarification, am I correct in my understanding that this section is not to be completed by Directors but instead is provided for people who are trading on their own name to claim back expenses against tax or to claim back the difference in underpaid expenses? (i.e. 25p paid for mileage so 20p claimed).

To answer this you need to understand what goes on the P11D and then how that relates to your personal SA. So basically there are two questions.

What goes on the P11D? - Put simply, any expenses that might be liable as BiK because there is a potential personal benefit. That includes travel and accommodation expenses but NOT statutory allowances such as 45p/mile claims.

What goes in the SA? - Declare the 'benefit' paid by the employer (amount copied from P11D) and also declare that you incurred the same amount as a business expense. I.e. you enter the same amount twice on the SA in different boxes.

This post from NW, http://forums.contractoruk.com/accou...ml#post1541668 explains it very well, concluding:

These two entries then cancel each other out so there is no additional income on your return and thus no additional tax charge.

Note that assets or consumables that you simply pay for out-of-pocket and then claim back from the business are generally accepted as being out of scope for P11D as these are clearly business expenses. HMRC have guidelines on what is/is not to be treated as BiK.

Also note that in HMRC's view the method of payment bears absolutely no relevance to any of the above. Paying for an expense via the company debit card does not mean it shouldn't be recorded on the P11D. Please ignore Mal's sanctimonious comments because in general (unless you want to dismiss the HMRC guidance) paying direct from the company account should make no difference to the P11D or SA.