Reimbursement for expenses policy

Most organisations have their own reimbursement practices when it comes to expenses.

These should be well thought-out (since expenses may be open to abuse), committed to writing (so that no misunderstandings can arise), made known to all employees and carefully monitored.

Check with your tax adviser to find out which expenses you should reimburse. Situations in which expenses can be accrued include:

Travelling and subsistence
Hospitality costs
Home business telephone calls
Teleworking: working from home via telephone, computer and fax.

There are various methods by which an organisation may reimburse employee's expenses:

Refunding against receipts kept and submitted by the employee (employees should be advised of a time limit for submission of expenses)
Issuing an organisation credit card for expenses
Issuing a set-price policy; fixed maximum claim for particular expenses
Defining the job types and status of employees who are entitled to claim expenses.

There are detailed provisions relating to tax on employee's benefits in kind, with most benefits being provided tax-free nowadays.

Certain employers may be eligible for a tax dispensation if they regularly reimburse their employee's expenses. The dispensation consists of a written authorisation from the Inland Revenue for certain agreed expenses not to be reported on the P11 (deductions working sheet).

The levels for each tax allowance are available from the local tax office.