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bigduckontax, Accountant
Category: Tax
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I hope you can help. The facts: Employer pays employee's

Customer Question

Hi there
I hope you can help.
The facts:
Employer pays employee's personal professional subscription directly to a List 3 approved organisation.
The subscription is a wholly, exclusively and necessary expense.
There is no P11D dispensation in place - where does this get reported on the P11D?
Many thanks
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.

Hello Sally, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.

It does not get reported on the P11d as it is not a benefit in kind. You must make sure, however, that you do not claim this subscription as an expense in business on your self assessment tax return if you have to make one. I claimed such a professional fee from my employers for one of my qualifications for many years. It is a very common practice, particularly with large employers.

I do hope that you have found my reply of assistance.

Customer: replied 1 year ago.
Hello KeithHMRC's guidance suggests that in the absence of a P11D dispensation it is indeed reportable on P11D.RegardsSally
Expert:  bigduckontax replied 1 year ago.

This is not the case. If it were reported on a Form P11d then you would be taxed on it by an adjustment to your tax code. You would then have to claim it as an expense in employment on your annual self assessment tax return to restore the position. The whole process would be an exercise in financial futility.

All big organisations would have a dispensation in place to cover such matters.

Customer: replied 1 year ago.
But this is where the S336 claim comes into play. A headache yes but in the absence of a dispensation the professional subscription must still be reported is that not correct? Is it not also important whether it was the employee who contracted or the employer? And hence possibly Class 1A NIC's are due?I appreciate that big companies have dispensations in place - this particular one doesn't however, hence the question.
Expert:  bigduckontax replied 1 year ago.

I am sorry to be obtuse, but this is a matter for the employer, not the individual taxpayer. If the employer fails to obtain a dispensation and report this as a benefit in kind you merely claim it back from HMRC in your annual self assessment tax return which you may now well have to make. If you then find yourself liable to additional NI contributions then you should reclaim these from your employer. After all it is their shoddy processing that has cost you money. It strikes me that the employer's payroll section needs to sharpen up.

Customer: replied 1 year ago.
is it a benefit in kind that therefore needs to be reported on the P11D? If that is the case which is the most appropriate section for it? The employee contracted with the List 3 institution - are Class 1A NICs payable?
Expert:  bigduckontax replied 1 year ago.

No it is not a benefit in kind as I originally explained. The employer should seek a dispensation.

Customer: replied 1 year ago.
I disagree with the information you have provided: in the absence of a dispensation professional subscriptions are included as a benefit in kind. Class 1A national insurance contributions are payable by the employer, not the employee. Furthermore, with effect from April 2016 dispensations have been abolished - your suggestion that the employer should seek a dispensation is therefore incorrect.
Expert:  bigduckontax replied 1 year ago.

So what; we are concerned with the 15/16 tax year.

In any event, if the fee to the professional institute was wholly and necessarily needed for the employer's business, then the fee would be allowable against the employer's profits and thus not a benefit in kind and therefore no Form P11d action would be needed.