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’s included in professional fees and subscriptions?
If you pick up the costs of professional fees and subscriptions for your employees, you might be expected to report these expenses to HMRC. You might also have to pay additional tax and National Insurance as a result.
When HMRC refers to professional fees and subscriptions, they mean fees for membership to professional bodies as well as annual subscriptions to certain bodies. These need to be on the HMRC approved list to be considered as such. They also need to be necessary or advantageous to the employee in the course of performing their job.
Are there any exemptions?
If the following conditions apply, you won’t need to report these costs to HMRC or pay any additional tax or National Insurance:
- If you pay the organisation directly or your employee pays the fee or subscription and you reimburse them
- If the organisation is on the HMRC’s ‘list3’ of approved professional bodies
- If you have exemptions covering these fees or subscriptions.
‘List3’ is also known as the list of ‘Approved Professional Organisations and Learned Societies’ and is available on the HMRC website. It is a very comprehensive and extensive list and there are over 100 professional bodies and organisations listed. They are listed alphabetically to help you easily find the organisation you are looking for.
If the fees or subscription form part of a salary sacrifice arrangement then you will need to report these expenses to HMRC, even if they otherwise meet the exemption criteria.
How do you report to HMRC and pay?
If the fees or subscriptions aren’t covered by the exemptions, you might need to report these costs to HMRC and you might have to deduct and pay additional tax and National Insurance on them. Whether you need to report and pay will depend on the circumstances.
If the organisation is listed on ‘list 3’ and you either pay those fees or subscriptions costs directly to the organisation or by reimbursing your employee, you won’t need to report these to HMRC and there will be no additional tax or National Insurance to deduct and pay.
If the organisation isn’t included on ‘list 3’, how you report these costs depends on how the fees or subscriptions get paid. If you pay the organisation directly, you need to add the cost of the fee (or subscription) to the employee’s other earnings when deducting Class 1 National Insurance through payroll. There will be no additional PAYE tax to pay though. However, if you reimburse your employee for these fees or subscriptions, HMRC states that these should be treated as earnings, so you need to add them to their other earnings. You then need to deduct PAYE tax and Class 1 National Insurance through payroll in the same way you do for their ordinary earnings.
If these expenses form part of a salary sacrifice arrangement and the amount of salary given up is greater than the cost of the fees or subscriptions, you need to report the salary amount to HMRC 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.