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bigduckontax
bigduckontax, Accountant
Category: Tax
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Currently completing P11ds and we have Flights and Hotels

Resolved Question:

Currently completing P11ds and we have Flights and Hotels costs accumulated for a Director. I am wondering if am correct in putting these costs in section M of the P11d other items and we pay the Class 1 a on it or does it go under N. General expenses allowance for business travel and the individual is taxed on it ?
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.

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

Why are you reporting such payments on a Form P11d at all?. This form is for reporting benefits in kind and if the expenses are wholly and necessarily expended for the company's business then they do not comprise a benefit in kind. Employees are not taxed on such matters, which they would be were they entered on the Form P11d.

You may wish to come back to me on this question.

Customer: replied 1 year ago.

on the other hand if we had paid personal accommodation and flights would this be taxable if the company had paid it or down to the individual to make good the cost

Expert:  bigduckontax replied 1 year ago.

If the individual paid off the expenditure it would not need to be reported. If, on the other hand, it was not immediately reimbursed it would become a loan to a shareholder or a director or both. This can have horrendous tax consequences. Here is a cautionary comment from Whitefield Tax:

' In terms of tax, a special charge exists under s 455 CTA 2010, sometimes known as Advance Corporation Tax. This dictates that if a loan is made to a director / shareholder then a tax payment equal to 32.5% (25% pre 31 March 2016) of the loan value needs to be paid to HMRC if the loan is still outstanding 9 months after the year end – this tax is repaid to the company 9 months after the accounting year in which the loan is repaid.'

Of course using a company to arrange private travel with the individual making good the payment immediately is common and quite proper. This does not involve the P11d procedure as there is no benefit in kind involved.

Customer: replied 1 year ago.

However if their normal place of work is Plymouth and we pay for flights from their home in lets say Scotland to Plymouth each week is that not classed as a benefit in kind ?

Expert:  bigduckontax replied 1 year ago.

It is a general point of taxation principle that conveyance from residence to normal place of work is the financial responsibility of the individual. Thus for these weekly journeys such payments would constitute a benefit in kind and entered at N on that form.

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Expert:  bigduckontax replied 1 year ago.

Thank you for your support.