Questions and Answers
Employer's credit card
In error, one of my employees recently paid for an expensive handbag on the company credit card; rather than her own. She’s performed really well in the last year, so I said she could keep it and not bother paying the company back too. But are there any tax implications?
Firstly, you will need to add it to her earnings when calculating her National Insurance deductions. For the purposes of her PAYE calculation, it will be ignored though.
You will also then need to report it on form P11D in box C, but this will not trigger any Class 1A National Insurance for you to pay.
And finally, she will then need to complete a tax return and declare her income and the ‘benefit’ shown on her P11D.
Therefore, National Insurance will be deducted from her almost immediately via the payroll. And then she will be taxed on the benefit once the tax year end has passed. In effect, the cost of the bag is treated like any normal wages; there’s just a delay in the collection of the tax.
If you would like more advice on expenses and benefitsor wish to discuss something else tax or accountancy related, please feel free to contact your local TaxAssist Accountant.
Date published 5 Dec 2012
This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.Choose the right accounting firm for you
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