Expenses And Benefits In Kind For Previous Year (Info)

For establishing the amount of taxable expenses and benefits in kind relevant for tax credit purposes for a previous year, forms P11D and P9D can be used.

The remainder of this subject is presented as follows

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Form P11D
Form P9D

Form P11D

This is issued where the employee is a director or earns £8,500 or more in the tax year. Not all sections of form P11D are relevant for tax credit purposes. The Sections are lettered A to O.

Section	Comments
Section A Assets transferred (cars, property, goods or other assets)	An amount shown in this section should be included as income for tax credits (box 5.4 on the claim form)
Section B Payments made on behalf of employee	An amount shown in the first box in this section should be included as income for tax credits (box 5.4 on the claim form) An amount in the second box (headed ‘Tax on notional payments not borne by employee within 30 days of receipt of each notional payment’) should be ignored
Section C Vouchers or credit cards	An amount shown in this section should be included as income for tax credits (box 5.4 on the claim form)
Section D Living accommodation	Any amount in this section should be ignored
Section E Mileage allowance	An amount in this section should be included in full as income for tax credits (box 5.4 on the claim form) unless the allowances payments are in respect of qualifying travelling expenses. These consist of two types of business journey Journeys that employees haveto make in the performance of their duties And Journeys that employees make to or from a place they have to attend in the performance of their duties, but not journeys that are ordinary commuting or private travel Where the allowances are for qualifying travelling expenses, for the year 2001 / 2002 only the P11D amount can be reduced by the cost of these journeys either by using The authorised mileage rates for the cylinder capacity of the car Or A calculation of the actual motoring costs incurred in the journeys For the year 2003 / 2004 onwards, only the amount paid in excess of the approved amount of mileage allowance payments will appear in this box on the form
Section F Cars and car fuel	An amount in either of the boxes in this section should be included as income for tax credits (box 5.4 on the claim form)
Section G Vans	Any amount in this section should be ignored
Section H Interest-free and low interest loans	Any amount in this section should be ignored unless it relates to a notional interest-free loan that the employee / director is treated as having because they hold shares or other securities that they bought for less than market value
Section I Private medical treatment or insurance	Any amount in this section should be ignored
Section J Qualifying relocation expenses payments and benefits	Any amount in this section should be included for tax credit purposes as the limited income tax exemption of £8,000 (s271 and s287 ITEPA 2003) has already been taken into account by the employer and it is only the ecxess above that amount which is included on the P11D (see EIM03100)
Section K Services supplied	Any amount in this section should be ignored
Section L Assets placed at the employee’s disposal	Any amount in this section should be ignored
Section M Shares	Any amount in this section should be ignored as it does not contain the amount of taxable gains from share schemes, only the fact that they have occured in the year
Section N Other items (including subscriptions and professional fees)	Various items may be included here but not all are relevant Fees or subscriptions borne by the employer on the employee’s behalf where the arrangement is between the employee and the organisation These should be included as income unless the fees and subscriptions are to a professional body or learned society. See the Employment Income Manual at EIM32890 and EIM32900 Educational assistance awarded to students by reason of their parent’s employment Ignored for tax credit purposes Nursery places provided for the children of directors or employees Ignored for tax credit purposes Income tax paid to the Collector of Taxes that was not deducted from a director’s earnings through PAYE Ignored for tax credit purposes
Section O Expenses payments made to, or on behalf of, the employee	Various items may be included here but not all are relevant Travelling and subsistence payments Include as income (box 5.4) unless Wholly, exclusively and necessarily incurred in the performance of the duties of the claimant’s employment Qualifying travelling expenses Necessary expenses are those which each and every person doing the job would have to meet The expenses have to be incurred in actually carrying out the duties of the job not those that put someone on a position to start a job See the Employment Income Manual at EIM31620 onwards and the note below regarding Ministers of Religion and Clergymen Qualifying travelling expenses consist of two types of business journey Journeys that employees have to make in the performance of their duties And Journeys that employees make to or from a place they have to attend in the performance of their duties, but not journeys that are ordinary commuting or private travel For more information see the Employment Income Manual at EIM32015 for details Entertainment expenses, payments for use of home telephone or other expenses Include as income (box 5.4) unless wholly, exclusively and necessarily incurred in the performance of the duties of the claimant’s employment Necessary expenses are those which each and every person doing the job would have to meet. The expenses have to be incurred in actually carrying out the duties of the job not those that put someone on a position to start a job. See the Employment Income Manual at EIM31620 onwards and note below regarding Ministers of Religion and Clergymen General expenses allowance for business travel (that is a ‘round sum’ or flat rate allowance), non qualifying relocation expenses or personal incidental expenses Include as income (box 5.4)

Note: Expenses payments received by Ministers of Religion and Clergymen

Special expenses rules apply to these taxpayers for income tax purposes. However, for the year 2001 / 2002 only not all of these have been applied to tax credits.

Under income tax rules, Minnisters and CLergymen are able to apply for a deduction for expenses incurred wholly, exclusively and necessarily in the performance of their duties. This is the same as with any other employee / office holder and the Schedule E (SE) Manual at SE60046 - 60048 gives examples of the sort of expenses that are considered ‘necessary’ for Ministers / Clergymen.

For tax credit purposes (for the year 2001 / 2002only)deduction of these expenese is not allowed. However, where such expenses are paid or reimbursed to an employee, the amount of these expense payments is excluded from tax credit income (and thus achieves the same result).

For many Ministers of Religion, their place of work is their home. Therefore, where a room in the house is set aside exclusively for work use, rent or other related home expenses: gas, electricity, cleaning and Council Tax (see the Schedule E (SE) Manual at SE32815) paid or reimbursed to them can be reduced for tax credit purposes by a proportion of the costs of the room.

Income tax law allows Ministers and Clergymen to also deduct

A proportion, not exceeding one quarter, of the rent paid for a dwelling house any part of which is used mainly and substantially (that is, not exclusively) for the purposes of the minister's duties

One quarter of the expenditure on the maintenance, repair, insurance or management of any accommodation which is made available to the minister. See the Schedule E (SE) Manual at SE60044. This does not refer to property of the Minister / Clergyman but is a property provided for their use by a charity or church corporation

Again, for tax credit purposes for the year 2001 / 2002 only, deduction of these types of expenses is not allowed. In addition though, if any of these expenses are paid or reimbursed to Ministers / Clergymen and shown on the P11D, then the amount of these payments is not excluded. They should be included as income (claim form box 5.4). Therefore there is a different treatment.

It is unlikely that a Minister / Clergyman would be expected to pay for repair and maintenance of a property that is not their own. The second situation described above will therefore be rare.

For 2003 / 2004 onwards - The treatment of Ministers of Religion and Clergymen follows the income tax rules. For further guidance, see Taxable Earnings Adjustments For Tax Credits.

Form P9D

This is issued where the employee is not a director and earns less than £8,500 in the tax year. Not all sections of form P9D are relevant for tax credit purposes. The Sections are lettered A to C

Section	Comments
Section A(1) Expenses payments	Any amount in this section should be ignored
Section A(2) Any other payments or benefits	Various items may be included here but not all are relevant for tax credits Employee’s own National Insurance contributions paid by the employer Employee’s personal telephone bills paid by the employer Gifts in kind, for example Christmas hampers or presents Any amounts shown for these 3 items should be included as income (claim form box 5.4) Anything bought for or, paid to, the employee other than at market value Any amount shown for this should be included as income Any payment or benefit not included elsewhere Any amount shown here should be included if it was a payment made by the employer on the employee’s behalf (for example other bills paid direct)
Section B Vouchers and credit cards	Any amounts shown in this section should be included as income (claim form box 5.4)
Section C Accommodation	Any amount in this section should be ignored

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