Tip – Company Credit Cards Are Not Personal Credit Cards

downloadA reminder as to the procedure for dealing with personal items bought using a company credit card. Remember for the small family company, company credit cards are that, they are not personal cards. A company is a separate entity and all company transactions must be accounted for. Anything that is not business will be taxed.

NIC

In the month that the company settles the bill the personal expense should be processed as additional salary and the NIC deducted from the employee/director. There is of course a corresponding employer’s national insurance deduction for the company.

  • Employer class 1 13.8%
  • There is no employer’s class 1A on this benefit
  • Employee primary class 1 at 12%

Income tax

There is no PAYE deduction as the credit card payment is treated as a benefit in kind and should be shown on the P11D. The onus is on the company employer to decide which is business and which is private usage.

The company employer may have dispensation for business usage as applied for on P11DX. If not all goes on the P11D and employee makes a S336 claim for the business usage. It is best to have the dispensation for business usage in place as having to do a S336 claim is either by letter, or completing form P87 or a self assessment tax return for the appropriate tax year.

At present there is a proposal to scrap this dispensation from 6/04/15. HMRC issued a consultation document on 18/06/14 on the same day they published another consultation document ‘Expenses and Benefits Abolition of the £8500 Threshold’. Everyone will now need to complete a P11d for all expenses and benefits. If you use your company credit card for personal use beware of the PAYE audit.

Need to ask any further questions get in touch with richard@connollyaccountants.co.uk