This guide explains your tax and National Insurance contributions (NICs) obligations if you cover the costs of an employee’s personal bills for goods or services supplied to them. These obligations differ depending on the way in which you cover the costs.
On this page:
You arrange for the supply of goods or services to your employee and you pay the supplier directly for them. The contract for the goods or services is between you and the supplier.
For employees earning at a rate of less than £8,500 per year, you have:
For company directors or employees earning at a rate of £8,500 or more per year:
The value to use is the amount you pay for the goods or services supplied to the employee.
Your employee arranges for the supply of goods or services, but you pay the supplier directly for them. The contract for the goods or services is between your employee and the supplier.
For employees earning less than a rate of £8,500 per year:
For company directors or employees earning at a rate of £8,500 or more per year:
The value to use is the amount you pay for the goods or services supplied to the employee.
Your employee arranges and pays for the supply of goods or services, but you then reimburse the amount they’ve paid. The contract for the goods or services is between your employee and the supplier.
The amount you reimburse counts as earnings, so:
The value to use is the amount you reimburse to the employee.
It’s important to choose correctly between forms P11D and P9D for each employee. The form to use depends on the whether the employee is a director of your company and on whether their earnings are above or below an annual rate of £8,500. For more information – including details of what’s included in the £8,500 threshold - follow the link below.
NIM02270: Class 1 NICs - payment of bills
EIM00580: Employer paying employee's debt - the pecuniary liability principle
