P11d what is regarded as expenses and benefits?

anna25071970

My OH and I have a ltd company. He is director and employee and I am employee.
We have a business bank account and deferred debit cards.

Recently he has been advised by our new accountants that there are certain thing that can be paid for by the company. Our old accountants did not mention any of these and gave us different advice so I want to make sure this is correct.

He has started paying for his travel to work about £20 per week from the business account He has also paid for things like entertianing when meeting a client once and personal indemnity insurance, books relating to the company, stamps and software.

It is a little unclear whether these things need to be declared on a P11d form or whether they are company expenses and therefore do not need to appear on the forms. Obviously we want to make sure the correct information is supplied.

Also, although two books were bought using the company debit card, the invoice does not mention the company, just my OH name.

If this is not allowed we will obviously refund the money to the company from our personal bank accounts but we want to make sure all is correct on payroll forms.

Just to add that we pay our accountants to do all the payroll.

fengirl_2

Travel to and from work is taxable and should be included with wages and taxed under PAYE.
Entertaining, books, stamps, etc are a business expense and will be allowable for CT (although entertaining will be added back). Personal indemnity insurance is a personal expense and will be shown on the P11d.

The accountant should be giving you detailed advice about this.

Pennywise

There's a difference between expenses he incurs privately on behalf of the company and personal expenses for which he wishes to claim from the company.

If, for example, he has a personal mobile phone used for business, then all he can claim are the extra costs of business use, i.e. the business calls, and not the private calls nor proportion of fixed costs. This is reportable on P11d as its a reclaim of personal costs, but isn't taxable as it's a legitimate expense of his office, so it goes in his personal tax return as a payment but the same amount is claimed as an expense, hence no effect. Company gets tax relief on the payment for the business use.

Conversely, if he personally buys some stamps and stationery from WH Smith, all of which are used for business, it's a business expense and exempt from reporting on the P11d and doesn't go on his tax return.

Re travel, as Fengirl rightly says travel to a fixed/permanent workplace isn't allowable, so if, say, he has an office or workshop where his "work" is based, he can't claim travel from home to it. However, if he is based at home, and he travels to various client sites, then all his travel to such sites will be allowable. Again, the expenses are personal, so when reclaimed, they are reportable on the P11d and then reported and claimed on his personal tax return, so again, no personal tax affect. If he's claiming the HMRC mileage rate that is exempt from P11d reporting for business journeys, so he's only going to report things like train, bus, taxi fares etc.

Re insurance, do you mean professional indemnity insurance or public liability insurance as I don't know what you mean by personal indemnity insurance. Business insurances are allowable, personal insurances aren't allowable. Business insurance should be in business name, so not a P11d matter. Personal insurances shouldn't be claimed from the company anyway.

Hopefully that may help clear things up a bit, but you should really be getting this advice from your accountant - otherwise what are you paying them for?

anna25071970

Pennywise wrote: »

There's a difference between expenses he incurs privately on behalf of the company and personal expenses for which he wishes to claim from the company.

If, for example, he has a personal mobile phone used for business, then all he can claim are the extra costs of business use, i.e. the business calls, and not the private calls nor proportion of fixed costs. This is reportable on P11d as its a reclaim of personal costs, but isn't taxable as it's a legitimate expense of his office, so it goes in his personal tax return as a payment but the same amount is claimed as an expense, hence no effect. Company gets tax relief on the payment for the business use.

Conversely, if he personally buys some stamps and stationery from WH Smith, all of which are used for business, it's a business expense and exempt from reporting on the P11d and doesn't go on his tax return.

Re travel, as Fengirl rightly says travel to a fixed/permanent workplace isn't allowable, so if, say, he has an office or workshop where his "work" is based, he can't claim travel from home to it. However, if he is based at home, and he travels to various client sites, then all his travel to such sites will be allowable. Again, the expenses are personal, so when reclaimed, they are reportable on the P11d and then reported and claimed on his personal tax return, so again, no personal tax affect. If he's claiming the HMRC mileage rate that is exempt from P11d reporting for business journeys, so he's only going to report things like train, bus, taxi fares etc.

Re insurance, do you mean professional indemnity insurance or public liability insurance as I don't know what you mean by personal indemnity insurance. Business insurances are allowable, personal insurances aren't allowable. Business insurance should be in business name, so not a P11d matter. Personal insurances shouldn't be claimed from the company anyway.

Hopefully that may help clear things up a bit, but you should really be getting this advice from your accountant - otherwise what are you paying them for?

Thank you for the reply. It is professional indemnity insurance. Our accountants told us to pay this through the company although "it might not be allowable for tax purposes".

So, just to confirm, that come May he should be submitting a P11d (or our accountants should) and this should show things like travel from home to work and profesional indemnity insurance. He only has this insurance because of his specific line of work in order to make money for the company.

He has a mobile phone but he doesn't make any business calls on it and the company doesn't pay anything towads it.