New announcement. Learn more

CHARTERED ACCOUNTANTS (ICAEW)

News and advice to help make your property business a success

LANDLORDS FINANCIAL BLOG
All
Landlords TaxProperty TaxLandlords Tax ReturnsLandlords AccountsProperty Tax ReturnProperty AccountsTax ReturnsLandlords FinancialChartered AccountantsOnline AccountantOnline BookkeepingOnline Tax ReturnsYour Online AccountantYour Online BookkeeperTaxBusinessadviceAccountingCashflowProperty AccountantSmallbusinessVATBusinesstipsExpensesInheritance TaxPropertyTaxplanningCapital Gains TaxCgtFurnished Holiday LettingsLandlords AccountantPAYEProperty bookkeeperSDLTTaxreturnAllowable Business ExpensesAnnual Exempt AmountBusiness ExpensesBusiness RateCapital AllowancesCapital GainsCapital gains tax propertyComplianceDeductibleexpensesDisincorporationDividendsEmployment AllowanceFinanceFinancialmanagementGiftsHMRCHoliday Lets TaxIhtexemptionsIncome TaxInvestment Property TaxMaking Tax DigitalMakingTaxDigitalMileage AllowanceMobilephonesNICOverlapreliefPensionPprProperty Company TaxProperty Tax Deductible ExpensesPropertyallowanceReimbursedexpensesRent a Room ReliefSmall BusinessTimetoPayVAT invoice60 day capital gains limitAbolitionclass2AccrualsbasisAcquisitionsAdvisoryfuelratesAIAirBnBAlphabet sharesAmapAnnual Tax on Enveloped DwellingsAppealArtificial intelligenceAssessmentAsset disposalAssociated CompanyAssociated Company Tax RulesAutumnstatementBad DebtBad Debt Tax ReliefBaddebtsBadgesoftradeBeancounterBenefits in KindBreakeven PointBudgetBusiness adviceBusiness asset defermentBusiness coachBusiness ContinuityBusiness EntertainmentBusiness RatesBusiness Rates ReliefBusiness tipsBusinessgrowthBusinesstypesBuy or Lease EquipmentBuytoletCapital Allowances for CarsCapital GainCapitalallowancesCapitalexpenditureCar Capital AllowancesCarry Back LossesCashbasisChange of Tax BasisChatGPTChild BenefitCIS SchemeCommon TenantCompanies ExpenditureCompanies HouseCompany Account DeadlinesCompany Account FilingCompany Strike OffCompany Tax Efficient PropertyCompanyassociationCompanyloanstaxfreeCompulsory Strike OffConstruction Industry SchemeContacthmrcContentmarketingContributionsCorporation Tax LossesCorporation Tax New RegimeCorporation Tax RatesCorporationTaxCostsCryptocurrencyCustomerlistimplicationsDeductible Business ExpensesDeductionsDemergerDepreciationDevelopmentDirectorsDirectors LoansDirectorsloansDisallowable Business ExpensesDiscoveryDividend allowanceDividend Allowance ReductionDividend PlanningDividendallowanceDLADomestic Items Tax ReliefDormantcompanyEmployee DiscountEmployee managementEmployeecompensationpaymentsEmployeeOwnershipTrustEndoflifeplanningEnquiryEnterpriseResourcePlanningEntertainmentEntrepreneurmindsetEquityExpenses Allowed For TaxExtrabenefitEyetestsFHLsFlippingFurnished Holiday Lets TaxGift AidGift AllowanceGrowthhacksHelp to pay tax billsHICBCHMO Licensing FeesHMRC complaintsHoldoverreliefHoliday Lettings TaxHow to apply for a Business LoanHow to Extract ProfitHumourHybridIllegaldividendsIncomeInflationary GainsInfluencersInheritance Tax Nil Rate BandInterest RatesInterestreliefInterestrestrictionISAJoint TenantKeypersoninsuranceLandlord RepairsLandlords Self AssessmentLate vat registrationLBTTLeadgenerationLeadmagnetLeanbusinessmodelLetting Agent DisbursementsLetting Agent RecharresLettingsLettings ReliefLimitedcompanyLiquidation DemergerLoaninterestLong Lets TaxLongserviceLTTMainresidencereliefManaged LetsManagement accountingMaritalhomedivorceMarriage allowanceMarriageallowanceMileage paymentMinimumwageMixedusesdltMortgage costsMortgage Interest ReliefNational InsuranceNew propertyNewcompanycarfuelratesNewnicrulesNIC 2023 to 2024NIC savingsNicdisregardNicreductionNMWNmwerrorsNon Allowable Business ExpensesNon-taxableNudgeletterOptiontotaxvatOverpayment ReliefPaperformPartnershipPartnershipbusinessesParttimePatternofoccupancyPAYE by Direct DebitPayrollingPenaltypointsPension Payments Tax ReliefPensioncontributionsPensionsPerformance-reviewsPeriodofgracePeriodsofabsencePersonal ExpensesPersonal financePersonalallowancePersonalguaranteesPostcessationreliefPretradingexpensesProfitProfit-and-lossProfitAndLossProperty AllowanceProperty Development CompanyProperty IncorporationProperty Investment CompanyProperty investor accountsProperty investor tax tipsProperty LettingProperty Rental BusinessProperty TradingPropertycompanyRecharges by Estate AgentsRegularpaymentsReliefRent your driveRentalRentaroomResearch & DevolopmentResidence ReliefResidential property gainsResidentialsdltRetail stock controlRetainedprofitsRevenueRoom for rent taxRtiSASalarySDLT changesSection 455 TaxSection455taxSelective Licences LandlordsSelf AssessmentSelf-employednicSelfemployedSelling OnlineSeperationServicechargesSettlementslegislationSimplified ExpensesSmallbizSmallbusinessratereliefSoftwareSpring BudgetStaffpartiesStamp dutySuccessJourneyTax Allowance on DrivewaysTax AllowancesTax BreakTax CodesTax DeadlinesTax DeductionsTax Filing DeadlinesTax Free ChildcareTax free incomeTax on Company VansTax positionTax ReliefTax tips for landlordsTaxbillpaymentsTaxconsequencesTaxincentivesTaxpositionTaxpositionassetsTaxreliefTaxreliefsTaxsesTerminationpaymentsTipsTrade professionalTrainingTransfer AssetsTransfer Assets Between SpousesUmbrellacompanyUndisclosedincomeUnpaid RentVAT Bad Debt ReliefVAT DeadlinesVAT DisbursementsVAT PenaltiesVAT registrationVAT Reverse ChargeVatpenaltiesVatregisteredVatregistrationthresholdWellbeingWorking from home
TAGS

Utilise the deduction for paid and reimbursed expenses

Utilise the deduction for paid and reimbursed expenses

Employees often need to incur expenses when undertaking their jobs. The nature of the expense may vary depending on the job, but typical expenses include travel and subsistence expenses and fees and subscriptions.

It will often be the case that the employee initially incurs the expense and then reclaims the cost from their employer via an expenses claim. The employer may also choose to pay expenses by making scale rate payments.

Reimbursed expenses

As long as certain conditions are met, reimbursed expenses are tax neutral – the employer can ignore the payment to the employee – there is no need to tell HMRC about it or deduct tax or National Insurance. Likewise, the employee does not have to pay tax on the reimbursed amount or claim a tax deduction for the expense that they met initially.

The exemption applies if the employee would be entitled to a deduction if they incurred the expense personally. However, the exemption does not apply where the payment is made under a salary sacrifice arrangement.

An expense will be deductible if incurred by an employee if the employee incurs it wholly, necessarily and exclusively in the performance of the duties of the employment. A deduction may also be permitted under a specific legislative provision, such as that governing travel expenses or fees and subscriptions.

Example

Angela is employed as a dentist. She is required to be a member of the British Dental Association by her employer. She pays her annual subscription, which she reclaims from her employer. The exemption applies and the reimbursement is ignored for tax purposes.

Scale rate payments

The exemption will also apply where scale rate payments are used to reimburse travel and subsistence expenses, as long as the amount has been calculated in an approved way and the employer is satisfied that the employee has undertaken the travel in respect of which the expense has been claimed. The employer can pay subsistence expenses using HMRC’s benchmark rates set out in regulations or agree bespoke rates with HMRC. The exemption does not apply if the payments are made under a salary sacrifice scheme.

Example

Brian is required to visit a supplier as part of his job. He undertakes seven hours of qualifying travel and is entitled to claim a meal allowance. His employer pays the statutory amount of £5. The exemption applies and the meal allowance is ignored for tax purposes.

Employer meets the expense

The exemption also comes into play if the employer meets the cost of an expense which would be deductible if incurred by the employee personally, such as the cost of a train ticket for an employee to visit a customer for a meeting. The amount paid is simply ignored for tax purposes.

Example

Catherine is required to attend a meeting with a supplier. Her employer purchases her train ticket. The exemption applies and Catherine’s employer does not need to tell HMRC about the expense or account for tax on it.



Copyright © 2024 Landlords Financial
POWERED BY ROCKETSPARK