Expenses and Purchasing Card Policy

3. Taxable Expenses

3.1.    It is important that all employees understand the potential tax implications of claiming expenses.

 3.2.    Under general tax law the majority of expenses and benefits payments made to employees are taxable remuneration. However, the employee is entitled to a deduction for any expenses which are incurred wholly, exclusively and necessarily in the performance of the duties of the employment and no tax is therefore payable on payments made.

 3.3.    To avoid the submission to HMRC of details of routine expenses payments and benefits that would clearly involve no extra tax liability because they are offset by allowable deductions, the University is able to obtain a 'dispensation', provided certain conditions are met. Where a dispensation is given, the Pay As You Earn scheme does not apply to the payments or benefits concerned. The University need not show the particular payments or benefits on the annual return made to HMRC, nor need the employee show them in his or her Tax Return.

 3.4.    Claims for expenditure not identified in this policy as appropriate for reimbursement are likely to be taxable. This means that tax and employee National Insurance Contributions will be deductible from the amount paid to the employee and employer National Insurance Contributions will be a cost to the University.

3.5.    Before making a claim for reimbursement of expenditure not identified in this policy, an employee should ask their College/Service whether reimbursement will be approved. The College/Service should contact the Pay and Benefits Office in Human Resources to clarify whether this will be treatable as a taxable expense. Such claims should be submitted to the Pay and Benefits Office in accordance with procedures published by Human Resources.