Expenses - are they taxable?

alan1406

Since the beginning of 2018 I have been working 3 or 4 days per week in London on a project for my employer. My normal place of work is (and was) Manchester, and will be so when the project is delivered. My primary work location has been confirmed to me by letter by my employer earlier this year as Manchester – it just so happens that for the next 6-12 months I will be a regular visitor to London

I have received from my employer a P11D detailing expenses claimed in the tax year 2017/2018 with an accompanying note to say they would be taxable. When the tax due is known, my employer would reimburse me via PAYE (they would have to gross this figure up also to account for my tax rate).


The expenses claimed reimbursed me for Travel, Hotels and Subsistence paid from my own account and I am at a loss to see how this can be deemed a taxable benefit. I understand that if you regularly work in a different location (e.g. 2+ years?) expenses do indeed become liable for tax, and under such circumstances it is better that the employer provides a taxable allowance on top of salary and then all expenses incurred are paid personally.


Prior to me completing my 2017/2018 Tax return, can anyone please confirm the actual HMRC rules regarding expenses paid for a period when working away from home - say upto 18 months?

GreenPark

I was always under the impression that if an employer sent an employee away for business they paid them the gross amount that was spent.
I worked as an accountant for a global shipping company which sent staff all over the globe for periods of time ranging from a couple of days to a couple of months. when that employee returned, they handed in their expense claim form with the appropriate receipts attached and the full amount was paid to the employee.
It is noted that most expenses, other than business entertaining actually reduces a companies profit and therefore their tax liability. Hotels, subsistence, taxis, flights etc are all expenses that reduce a companies profit.
I myself used to travel a lot for the company to Europe and not once have I received the amount of expenses I claimed throughout the tax year on my P11D.
Although I am unable to give you specific HMRC rules, this is something definitely worth looking into with a tax accountant or at least citizens advice

TheCyclingProgrammer

It does indeed sound like a temporary workplace (subject to the 24 month rule) and therefore any travel and subsistence costs reimbursed should not only be non-taxable, but not reportable on the P11D either under the new exemptions rules.

https://www.gov.uk/employer-reporting-expenses-benefits/dispensations

If you have been reimbursed and this has been reported on your P11D as a taxable expense then you should claim these as business expenses from HMRC (I'm not sure which form, you can do it under self-assessment but I think there's another form for employees who don't normally submit a SA).

[Deleted User]

TheCyclingProgrammer wrote: »

It does indeed sound like a temporary workplace (subject to the 24 month rule) and therefore any travel and subsistence costs reimbursed should not only be non-taxable, but not reportable on the P11D either under the new exemptions rules.

https://www.gov.uk/employer-reporting-expenses-benefits/dispensations

If you have been reimbursed and this has been reported on your P11D as a taxable expense then you should claim these as business expenses from HMRC (I'm not sure which form, you can do it under self-assessment but I think there's another form for employees who don't normally submit a SA).

https://www.gov.uk/guidance/claim-income-tax-relief-for-your-employment-expenses-p87

alan1406

Very useful information - thanks all!

BoGoF

I don't think it's as clear cut as made out. It is possible to have 2 permanent workplaces

https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim32140

If both were deemed permanent then expenses would be taxable

chrismac1

It is very simple in practice. No P11D required. Let HMRC come and try the BoGoF line and good luck to them with it.

TheCyclingProgrammer

What Chris said. The fact you!!!8217;re there for a specific project of limited duration heavily supports the fact that it!!!8217;s a temporary workplace. If your employer insists on recording these on a P11D I!!!8217;d have no hesitation in claiming the expenses as business travel.