It’s time to check end of year tax expenses. You may need to report details to HM Revenue & Customs (HMRC). If so, act between 6 April and 5 July 2021. Then, arrange payment of personal bills and expenses by July 5.
Remember, it’s possible to make good certain benefits and expenses. There is a key benefit to this. It means there’s no requirement to report them to HMRC.
Payment of personal bills and expenses
So, what is the position regarding tax and National Insurance? Basically, it depends on the contract. First, identify the parties to the contract. Next, clarify who paid the amount owing.
To help you, we’ve created a simple guide. Its aim? To simplify payment of personal bills and expenses. We explain how to report expenses that haven’t been made good. Also, we highlight how to calculate tax and NIC deductions.
Let’s look at an example. Say the company has paid for two meals. You realise that neither was business-related. Payment for the first was made by company credit card. You paid for the second meal personally. Subsequently, the company refunded you in full.
For the first transaction include the amount through the payroll. NICs Class 1 will be due. In addition, report it on a P11D for tax purposes.
Treat the second transaction as employed income. Deal with it through the payroll for tax/NIC purposes.
Download our handy infographic
You can download a simple infographic here.
Talk to our specialists
Struggling with payment of personal bills and expenses? Talk to our specialist team on 01785 243276.