5 September 2012 by Crystal HR & Payroll Ltd
Reimbursing Subscriptions & Professional Fees Through Payroll
If an employee earning over £8,500 per year is a member of a professional body approved by HM Revenue & Customs and meets 2 conditions, namely the business must involve the practice of the profession and the registration, certification, licensing or other reason for paying the fee is a condition that must be met before the person may practise the profession relevant to performing the duties of the employment.
If both of these conditions are met, then you can reimburse the employee through the payroll. Depending on what software you are using, you would enter the payment to the employee and select to enter it free of Income Tax and National Insurance.
At the end of the year, you must report this expense on form P11D. If the employee earns below £8,500 per year, then you would report on P9D.
Employers need to be very careful of the £8,500 rule. The £8,500 doesn’t only include wages/salary, which most employers we speak to believe it does, it also includes any benefits or expenses you pay your employee.
The £8,500 is also operated on a pro-forma basis, so if they earn more than £4,250 and only work for 6 months of the year, over the whole year, this would put them above the £8,500 mark, so you would report on P11D
Most directors qualifying subscriptions would be reported on a P11D