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Post Info TOPIC: Employee expenses - allowable?


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Employee expenses - allowable?


Hello. I was always taught, if a Director pays a tip on his allowable subsistence expenses that this tip is not allowable and I process that to DLA. What about Employees? First time this client has taken on employees, there is no expenses policy, told them but they just allow staff to do what they want so I feel I have to police it a bit. I think tips should be disallowed # but cannot find any technical guidance from HMRC, am going round in circles. Can anyone point me in the direction of some please?

#I am having to dis-allow fuel as they get paid mileage, so fuel amounts get deducted from expenses amount paid to employees. At least directors have spoken to staff now to stop this in future.



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Master Book-keeper

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Hi Helen, welcome to the forum.

What are the tips in respect of, employees own meals or entertaining clients?



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John

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Own meals. Subsistence. Thanks



-- Edited by HelenF02 on Friday 20th of August 2021 03:39:33 PM

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Hi Helen,

I would agree with you, if it was a service charge included on the bill then I would allow it as there is no choice in the matter, however a tip is discretionary and up to the customer if they wish to give one or not, if they do decide to leave a tip then it should be a personal expense and not a Company one, cant seem to find any legislation to back this up so just my opinion.



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Doug

These are only my opinions of how I see things and therefore should not be taken as advice



Master Book-keeper

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Hi Doug/Helen

Personal opinion - Think it needs to be employers choice whether to allow tips but with the priviso that the full value of the receipt is under the HMRC approved allowances. If not then the whole receipt is taxable anyway.



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John

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Hi John

Payroll is most certainly not my strong point but can an employer not pay above the scale rates as long as there is a valid receipt? I thought the scale rates were there as a benchmark so that the employer did not need to keep detailed evidence of each transaction.



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Doug

These are only my opinions of how I see things and therefore should not be taken as advice



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Hi
Thanks for input. EE didnt keep half of receipts in first month, despite being told to, so scale rates would be no use as (1) know he would not keep the requried receipts and (2) ER will not do the spot checks, based on history so far (months, except the tips part). Accountant agrees actual receipts method is best at this stage. Mustve been having a bad day as just realised the WEN rules (ITEPA) cover this so under general rule the amount is not WEN in performance of duties and EE not obliged to incur as not a service charge (which had it been should be refuted as generally applies to a party of people and this is an individual, subject to T&Cs of eating place). Am not aware of the'' that the full value of the receipt is under the HMRC approved allowances. If not then the whole receipt is taxable anyway.'' Can you advise where it states this please?

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HelenF02 wrote:

Am not aware of the'' that the full value of the receipt is under the HMRC approved allowances. If not then the whole receipt is taxable anyway.'' Can you advise where it states this please?


Hi Helen

I think John is looking at

https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim05231



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Doug

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Hi Helen/Doug

I must have misread it, I'm really sorry. Good job I don't have any in real life.

It's the excess over the agreed amount the employer sets that is taxable, not the whole receipt. That amount can be lower than the scale rates inhttps://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim30240 (your link was up to April 2016 Doug) but if higher then you need to agree bespoke rates with HMRC.



-- Edited by Leger on Thursday 26th of August 2021 02:58:24 PM

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John

Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.



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Are we not conflating two issues here? The link you give is about scale rates. So if you want to pay higher 'scale' or 'benchmark' rates then you must agree them with HMRC. This is surely not the same as paying the cost incurred rate.
Ignoring the voluntary tips issue.

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HelenF02 wrote:

Accountant agrees actual receipts method is best at this stage.


Hi Helen

I thought you had this all sorted with the accountant, I said my opinion up thread about using the actual receipts.



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Doug

These are only my opinions of how I see things and therefore should not be taken as advice



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I guess then my last comment was to Leger. Although I would of course have liked others to confirm my understanding of what I said 15.20 yesterday to ensure I am not getting it wrong! So I take it you agree that full receipts can be used and the link is JUST re benchmark rates? BTW The Accountant has not advised me (external bookkeeper) on the validity of claiming of the expenses, just agreed client is disorganised so should use actual receipts.

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Hi Helen
Thank you for getting back to me about congestion and emissions zone charges.
I'm not very expert on employee expenses, but think that actual receipts for subsistence is probably the best way to go.

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HelenF02 wrote:

So I take it you agree that full receipts can be used and the link is JUST re benchmark rates?


Yes I do agree,

Have a read of ITEPA 2003, ss337



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Doug

These are only my opinions of how I see things and therefore should not be taken as advice

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