Benefits in Kind can be confusing. We have put together some guidance on common areas of P11D confusion.
Staff entertaining and gifts are a good way to boost morale and improve employee retention. Common examples of staff entertaining and gifts include after work drinks, birthday presents and Christmas parties.
These are not considered a benefit in kind for employees in the following scenarios:
When entertaining and gifts do not fall under the above circumstances, they will give rise to an income tax charge for employees and a class 1a NIC charge for the employer.
Commonly these are reported on a PAYE Settlement Agreement rather than a P11D because this allows the employer to cover the employees tax charge. For further guidance see our PSA quickguide here and P11D quickguide here.
Staff entertaining and gifts are allowable expenses for corporation tax and the VAT is fully recoverable.
Travel and subsistence costs are costs which employees incur while travelling for business. This includes the cost of one-off train fares, taxis, food, and accommodation for overnight stays.
Travel and subsistence are not a taxable benefit on employees when:
This category of expense is allowable for corporation tax and the VAT is recoverable.
The cost of employees using their own cars for travel and season tickets do not fall under the above rules. Please see our statutory exemptions quickguide here for further information.
Employees’ private travel (including ordinary commuting) is taxable unless they are travelling to a ‘temporary workplace’. There are complex rules on what constitutes a temporary workplace and these should be considered if appropriate.
Meals provided to employees in a subsidised canteen within the office are tax free when:
The provision of food on site during meetings can be treated as tax free, where the food is merely provided to avoid the necessity of stopping the meeting for people to go and eat, for example a working lunch. However, this must be reviewed for reasonableness – the employer could not provide lunch on regular occasions as this would be deemed taxable.
Mobile phones have complex rules when it comes to P11D reporting. See the flowchart below for general guidance.
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