Our experts at DSR Tax Claims know how hard it is to find good, quality information about HMRC’s tax regulations that is easy to understand, and that’s why we have created these handy guides to tell you everything you need to know. Our aim is to make life easier for our clients and that is why we want to share our expertise with you. You can also call our friendly team on 0330 122 9972 – we’re the tax experts you can trust.
What happens if you cover credit, debit or charge card costs for your employees?
If you are an employer and you cover the cost of any credit, debit or charge card payments which are made by your employees, you might have to report this to HMRC and there may be additional National Insurance to pay, depending on the circumstances.
It all depends on how the card is used by the employee and what they purchase using that card. Different rules apply for certain purchases, for example, fuel costs for a company car or overnight travel expenses.
Are there any exemptions?
There is nothing to report to HMRC nor any additional National Insurance to pay if all of the following conditions apply to the purchase:
- Your employee is authorised by you as employer to make the purchase
- Your employee makes it clear to the supplier during the purchase that it is a business purchase which they are making on behalf of your company
- The supplier accepts that the purchase is business-related
- Your employee isn’t make a purchase that falls under special rules (for example, purchasing fuel for a company car). See our Expenses and Benefits guide to that particular item for more details.
If the charges form part of a salary sacrifice arrangement, they do need to be reported to HMRC.
What do you need to report and pay?
If the charges don’t fall into any of the exemptions already noted, you need to report them to HMRC and there may be tax and National Insurance to be paid on the charges. This depends on how the credit or debit card is used – whether it is used on the employer’s behalf and what they purchase with the card. When HMRC states “used on the employer’s behalf”, they specifically mean that the employee needs to make it clear that their purchase is on behalf of the company and the supplier of the goods accepts this.
If the card is used on behalf of the business but without permission
You will need to report the charge on your P11D and deduct Class 1 National Insurance through payroll but it won’t affect PAYE tax.
If the card is used for business purposes but not clearly on behalf of the employer
You need to report this on your P11D but there won’t be any further National Insurance or tax implications
If the card is used for private purchases but not clearly on behalf of the employer
This must be reported on your P11D form and Class 1 National Insurance should be deducted and paid although it won’t affect PAYE tax.
If it forms part of a salary sacrifice arrangement
If the amount of salary given up is greater than the cost of the charges then you need to report the salary amount on your P11D form instead. This only applies to salary sacrifice arrangements made after 6th April 2017.
How can DSR Tax Claims help?
We aim to make life as simple as possible for our clients and that includes giving you the information you need to make your taxes (and your life) simpler and less stressful. Our team of experts at DSR Tax Claims are always on hand to help our clients and our excellent standing with HMRC means that we can make sure you don’t fall foul of their regulations, while claiming your maximum tax relief. We can even take care of all that paperwork and deal with HMRC on your behalf too. Call our friendly team on 0330 122 9972 – we’re the tax experts you can trust.
This page was last updated on 06/11/2018.