Tool allowances
Definition or restrictions
You provide an employee with an allowance used to buy tools that are
only used for work.
What to report, what to pay
For employees earning at a rate of less than £8,500 per year:
- there are no reporting requirements
- you have no tax or NICs to pay
For company directors or employees earning at a rate of £8,500 or more
per year:
- report on form P11D - section N - unless you obtain a dispensation
that covers the allowance
- you have no tax or NICs to pay
How a dispensation can
reduce your reporting requirements
Work out the value
The value to use is the amount of the allowance you provide.
Technical guidance
NIM06230: Class 1 NICs -
tool allowances
EIM21610: supplies and services
on the employer's premises
