Using a company credit card for personal use

By mistake, one of my employees recently paid for an expensive handbag on the company credit card rather than her own. She’s worked very hard over the last year, so I said she could keep it and not bother paying the company back. But are there any tax implications?

2nd April 2017

Firstly, you will need to add it to her earnings when calculating her National Insurance deductions, although for the purposes of her PAYE calculation, it will be ignored.

You will also need to report it on form P11D in box C, but this will not trigger any Class 1A National Insurance for you to pay. However, as it’s added to her earnings for National Insurance purposes, not only will she suffer Class 1 National Insurance but you, as the employer, will be liable for Class 1 as well.

Finally, she will then need to complete a tax return and declare her income and the ‘benefit’ shown on her P11D.

Therefore, National Insurance will be deducted from her almost immediately via the payroll and then she will be taxed on the benefit once the tax year end has passed. In effect, the cost of the bag is treated like any normal wages; there’s just a delay in the collection of the tax.

If you would like more advice on expenses and benefits or wish to discuss something else tax or accountancy related, please feel free to call your local TaxAssist Accountant on 0800 0523 555.

By Jo Nockels

Disclaimer: Advice shared in this blog is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this forum, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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