Study Surgery

Q: Can you please explain what happens with P11D expenses? If, for example, an employee was reimbursed £500 for travelling expenses this would go on the P11D, but – as this is also an allowable expense – is this deduction also shown on the P11D?

A: This is often something students struggle to get their heads around. Basically, a P11D is an annual summary of any expenses and benefits you have received during the tax year as a result of your employment. So the taxable benefit for a company car would have to be included on the form as would any expenses that have been paid to you by your employer, in addition to your contracted salary or wage, such as travel and subsistence and also anything your employer has paid for on your behalf such as a professional subscription to the AAT.

As these expenses have been included on your P11D they are included on your Self-Assessment tax return as your earned income to be taxed. However, some of the expenses that your employer has paid to you and which are included on the P11D may also be allowable deductions for tax purposes against your employment income. An expense has to be wholly, exclusively and necessarily for the purposes of your employment to be deductible. Going back to the examples used above, travel and subsistence incurred on business for the purposes of your employment will be deductible expenses as will be the professional subscription to the AAT. Therefore, in order to avoid being taxed on these items you need to include them on the employment page of your Self- Assessment tax return as ‘expenses you have incurred in doing your job’ so that they are deducted from your earned income before it is taxed. In order to avoid all the paperwork involved and the inconvenience of completing a Self-Assessment tax return to claim a deduction for these expenses many businesses have P11D dispensations for common expense claims such as travel and subsistence. The dispensations have to be applied for with HMRC and they allow businesses to reimburse their employees for expenses such as travel and subsistence without the need for P11D’s and claims on a Self-Assessment tax return.

Simon Deane BA ACA is Managing Director of a private training partner