Our team of experts explain how you report holidays paid for by you to HMRC

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.

How should you report holidays to HMRC?

If you, as an employer, provide holidays for your staff, you may have to report this to HMRC and there may be additional tax and National Insurance to day. It all depends on the circumstances. What you have to report and whether you need to pay depends on the following circumstances:

  • Whether you arrange the holiday yourself or your employee does
  • Whether you pay for the holiday directly or whether the employee pays and you reimburse them
  • Whether you provide an actual holiday or vouchers which can be exchanged for a holiday.

Holiday vouchers

If you provide your staff with holiday vouchers which they can exchange for a holiday, you need to report this cost on your P11D form and deduct and pay Class 1 National Insurance based on the cost to you of the vouchers. There is no PAYE tax implication in this circumstance.

Holidays you pay for directly

The exact reporting details depend on who has arranged the holiday. If you have arranged the holiday and paid for it, it must be reported on your P11D and you will pay Class 1A National Insurance on its cost to you. If your employee arranges the holiday but you pay for it directly, it needs to be reported on your PD and you will deduct and pay Class 1 National Insurance on the cost to you but there will be no impact on PAYE tax.

Holidays arranged and paid for by your employee and reimbursed by you

As far as HMRC are concerned, this would count as additional earnings so you would need to add the amount you reimbursed your employee to their other earnings and then deduct Class 1 National Insurance and PAYE tax through payroll just as you would with their other earnings.

Salary sacrifice arrangements

If holidays form part of a salary sacrifice arrangement and the amount of salary given up is greater than the cost of the holiday, you need to report the salary amount on your P11D. 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.

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