If you are an employer in the UK and you provide expenses or benefits to your employees then you might need to report these to HM Revenue and Customs (HMRC) and pay tax and National Insurance on them. These expenses and benefits could include: company cars, health insurance, travel and entertainment expenses and childcare.
If as a UK employer you provide company cars and fuel to your employees then you will have to report this to HMRC and pay National Insurance on this benefit.
You will have to report:
- Company cars used for private journeys
- Fuel for private journeys
- Cars adapted for an employee with a disability
Employers favour giving employees a car allowance over a company car.
Providing private medical insurance to your employees will result in you, the employer, having to pay a certain tax, National Insurance and reporting both of these. What you will need to report depends on the kind of treatment or insurance you provide and when you pay the provider directly.
When employees entertain clients and you the employer are happy to cover the costs to do this you will need to pay a certain tax, National Insurance and report this to HMRC. Entertainment usually covers eating, drinking and other hospitality. HMRC also distinguishes between ‘business entertainment’ of clients and ‘non-business entertainment’ of clients.
An employer in the UK paying employee’s travel costs will have to pay a certain tax, National Insurance and report to HMRC. This includes costs for providing travel, reimbursing travel, accommodation, meals and other ‘subsistence’ while travelling (this includes meals, parking charges, congestion charges, business phone calls).
An employer in the UK providing childcare to your employees will mean you have to pay a certain tax, National Insurance and report to HMRC.
There are different rules depending on whether:
- you provide a workplace childcare facility yourself
- your employees pay for childcare themselves and you pay them back
- you contract directly with a childcare provider, such as a commercial nursery or a childminder
- you give your employees childcare vouchers
The other option is employer-supported childcare however this is normally provided through salary sacrifice.
Reporting employee benefits to HMRC
At the end of each tax year, the employer will need to submit a P11D form to HMRC for each employee that you provided expenses or benefits to. The P11D form will highlight to HMRC how much Class 1A National Insurance you need to pay on all the expenses and benefits you have provided.
If you’re looking to expand into the UK then we can help you on the journey. It pays to have the right advisers on board to help you set up in the UK. Paul Beare Ltd has been helping businesses like yours for almost a decade. Whether its HR and payroll or accounting and banking, we know where the likely bumps in the road are, and we can go with you on each step of the way.