For all businesses dealing with expenses and benefits can be a real headache. What counts as a benefit and what doesn’t? Why do we need to report all of our business expenses? What can we pay or provide to our staff tax-free? The rules can be lengthy and complicated, and the costs of getting it wrong can be significant for businesses. With tax rates, particularly National Insurance, on the rise and HMRC penalties for mistakes and omissions also increasing it’s more important than ever to review what you’re doing and plan ahead.

Common benefits provided by businesses include cars and fuel, loans, living accommodation and medical cover. Very often businesses are required to maintain detailed records simply to avoid a claim that tax is due, for example with pool vehicles and purchases of fuel. All businesses are required to file an annual P11D Return (including a declaration if no benefits were provided) and there are penalties for failing to submit a P11D, as well as for incomplete or incorrect forms. Omitted benefits in kind are the most common type of failure discovered by HMRC during an Employer Compliance Review.

Many employees, particularly Directors and senior personnel, will incur business expenses as part of doing their job. Often these have to be reported to HM Revenue & Customs in order to claim tax relief, which can be laborious and prone to mistakes, and failing to do so can result in an unexpected demand for tax, interest and penalties. Very often Directors expenses and associated expenditure (such as using a business credit card or charging personal bills to their company) are often only reviewed when the business accounts are prepared; often too late for the P11D Returns.

How can WMT Chartered Accountants help?

At WMT we have extensive experience in dealing with expenses and benefits in kind and can help you with advice and planning to ensure you always know exactly where you stand and that your costs – both taxation and administration – have been minimised. We’ll look at benefits you currently provide and those you might consider to help you minimise or eliminate altogether any tax charges and ensure that all of your obligations are met.

With certain benefits where tax has to be paid we can advise on solutions such as a PAYE Settlement Agreement which will mean that, should you wish, your employees don’t get hit with an unwelcome tax bill on those little extras that you choose to give as a means of motivation and thanks. We will also make sure that wherever exemptions and allowances are available you take the maximum advantage to save you and your employees money.

We can also advise and assist on designing and implementing salary sacrifice arrangements under which employees can pay for benefits in kind whilst saving tax and National Insurance.

Our assistance also includes putting in place expenses policies, approved expense rates, and Dispensation agreements with HMRC which could eliminate most of your reporting requirements and will save significant amounts of time for both you and your staff, allowing you to concentrate and focus on your business. Contrary to popular belief Dispensations can be obtained even for Directors of small companies when proper checking, monitoring and recording systems are in place.

We offer confidential, practical and invaluable advice to best assist our clients.  If you would like a free, no obligation discussion with us about any expenses or benefit in kind issues, please contact Peter Davies on 01727 838 255.