24 Oct Employee Equipment Allowance
I was chatting to a client last week and was asked if employees use equipment for work which they personally own or rent, can you reimburse them the business element of their costs tax and NI free. Well, the answer is that quantifying the amount you can pay without having to apply PAYE can be tricky especially where there is personal as well as business use of the equipment.
When you make a contribution to the costs incurred by an employee in providing equipment for use in their job, there is a standard formula to help calculate a reasonable claim that can be paid tax and NI free.
Note that while you can pay the allowance without deducting PAYE tax and NI the employee must declare the payment on their tax return and may be liable to pay tax through self-assessment or HMRC informal demand (Form P800).
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