General and background information

This P11D section is now divided into five subsections:

  • Travelling and subsistence payments
  • Entertainment
  • Payments for use of home telephone
  • Non-qualifying relocation expenses
  • Other expenses.

Travelling and subsistence payments

Employers should enter the total amount spent on fares, hotels, meals etc. Employees may then make claims for tax deductions.

Where employees intend to make claims for tax deductions they will need to ensure that they (and their employers) keep sufficient records to support such claims. This would include, for example, private and business mileage logbooks, amounts spent on meals, hotel bills and so on. All of these must be fully supported by bills and receipts which HMRC may wish to see.

If their payments do no more than reimburse legitimate business expenses, employers may wish to apply for a dispensation. If agreed this can save work for both employer and employee.

Information required

The total of sums paid to or on behalf of the director or employee, or members of his family or household, in respect of fares, hotels, meals and travel inside and outside the UK, any amount made good or which has suffered a tax deduction; and the cash equivalent.

Measure of expense

The costs met by the employer.

Practical points

  1. Dispensations are commonly given in this area, although directors are sometimes excluded. 
  2. HMRC have produced a specific guide called Booklet 490, which you may refer to for detailed information. A brief note of some major points is set out below. 
  3. Business travel is defined as journeys employees must make in performing their duties, or journeys to a place they must attend to perform their duties. Travel to a permanent workplace is regarded as home-to-work travel or ordinary commuting and is not allowable. Additionally, a journey that is substantially ordinary commuting is not allowable. Although HMRC gives some guidance (see Booklet 490 paragraphs 4.10 – 4.13), it is left for the employer to decide whether a journey is tax allowable or not and consequently covered by any dispensation or not.
  4. Relief for accommodation and subsistence costs is available for attendance either at a temporary workplace or at a workplace attended for a temporary purpose. Relief is therefore generally available for site-based workers, though after a maximum period of 24 months any workplace is regarded as a permanent workplace (Booklet 490 paragraphs 3.12 – 3.15). 
  5. HMRC often scrutinises overseas business trips or conferences, particularly where family members accompany the director or employee. All relevant expenditure should be shown on Form P11D and claims for expenditure in relation to the family need to be carefully considered (see Booklet 490, paragraph 8.23). 
  6. Reasonable payments to cover extra travel and accommodation costs incurred when public transport is disrupted due to industrial action are not subject to income tax and need not be shown on Form P11D. Similarly, if the employer provides disabled individuals with transport or financial assistance for home-to-office travel, no income tax is charged. Directors’ and employees’ travel expenses for travel between two group companies, both of which employ them, are tax-free.
  7. Where the following conditions apply, there is no requirement to enter the cost of a taxi, hired car or similar private transport on Form P11D:
    1. the employee is occasionally required to work until 9pm or later, but such occasions do not occur with regularity (for example, every Friday) or frequently (deemed to be more than 60 times in a year)
    2. at the time of going home, either public transport has ceased or a work-to-home journey would be likely to take much longer than normal.
  8. For personal items, such as newspapers and mini-bar, a tax-free amount of £5 a night (UK) or £10 a night (overseas) is allowed when travelling on business. These are called incidental overnight expenses and, provided the limits above are not exceeded, there is no need to declare these on Form P11D. If the limits are exceeded, the full amount, not just the excess, becomes taxable and subject to Class 1 or Class 1A NICs and should be reported in full in section N: blue or brown box respectively.
  9. Tax relief is available for home-to-work travel in a qualifying work bus.


There is a popular misconception amongst employers that entertaining expenses are not taxable because they are disallowed in computing the employer’s tax bill.

In the absence of a dispensation employers must always declare all amounts which relate to entertaining. It will then be open to employees to make claims for tax deductions.

Claims made by employees are subject to the wholly necessarily and exclusively rule. Care must be taken as personal entertaining (e.g. spouses, partners, colleagues or business acquaintances) is not allowable for tax purposes. There must be genuine business reasons on each occasion. Full records must be available to support claims. HMRC may wish to have full details of the circumstances, including who was entertained on a particular occasion, the reason for the entertainment, and how much was spent.

Employers should also be aware that Class 1 NIC may also be chargeable on personal liabilities.

If you carry on a trade, business, profession or vocation, you should also enter:

  • A tick in the box if any of the expenses payments have been, or will be, disallowed in your business’s tax computations.
  • A cross in the box if none of the expenses payments have been, or will be, disallowed in your business’s tax computations – staff entertainment only.

Information required

The total of all payments made exclusively for business entertaining, and any amounts made good or from which tax is deducted, resulting in the cash equivalent. Indicate if the organisation is trading and the entertaining costs have, or will be, disallowed for corporation tax purposes by selecting the Yes/No option. Select 'Yes' if the organisation is trading and no corporation tax disallowance is envisaged. Otherwise leave it blank.

Measure of expense

Entertaining includes the cost of food and drink, hospitality of any kind (shooting trips, Ascot or Wimbledon boxes) and gifts (unless the gift costs less than £50 a year, is not food, drink, tobacco or a voucher and includes a conspicuous advertisement). All types of payments should be considered, including:

  • round sum allowance for entertaining
  • cash reimbursement
  • company credit card
  • payment by employer of personal credit card expenditure
  • expenses which are charged on to clients.

For trading organisations the cost of all entertaining is initially accessible on the employee. However, the employee may claim the cost of all business entertaining provided that the employer is not receiving a corporation tax deduction in the company accounts for that expense – hence the significance of the 'Yes/No' option. The P11D does not distinguish between staff entertaining and business entertaining. Report any staff entertaining under section M ‘Other items’ in either the blue or brown box making the nature of the entry clear, alternatively apply for staff entertaining to be included in a PSA. 

Practical points

  1. An HMRC favourite for investigation is the annual Christmas party and indeed, other annual staff functions. HMRC accepts that no taxable benefit arises if the cost (including guests) does not exceed £150 a head including VAT.
    1. The £150 a head limit may apply to more than one function during the year if the total cost of the functions does not exceed £150. If there were three functions one year costing £80, £60 and £40 per head respectively, it would be possible to exempt the first two (as the total is under £150) and pay tax on the £40 function.
    2. If the cost of a single function exceeds £150 per head, an employee will be taxable on the total cost (not just the excess).
    3. For the exemption to apply, it is necessary for it to be a formal annual function, not just an informal drink.
    4. If the function is primarily corporate entertaining, e.g. a day at the races, HMRC normally accepts that no tax should be paid by employees in attendance to carry out business duties. HMRC will only accept this argument if the evidence supports it and may challenge this claim if the employees’ spouses or families attend or if there are more employees than business guests.
  2. If employees of different companies have a reciprocal arrangement and entertain each other on a regular basis, HMRC will not normally accept this, even if some business is discussed.
  3. Booklet 480 states at paragraph 20.7 that, the expense of entertaining colleagues, that is, other employees of the same organisation is not normally allowed. The word normally appears to offer some leeway. The usual example cited involves a director who hopes to persuade a young executive to accept an unwanted move or a promotion and feels his chances of success will improve if he discusses the matter away from the confines of the office over a meal and a bottle of wine. It is difficult to draw any firm conclusions from this example, but HMRC may allow this type of entertaining if it occurs infrequently. Any telephone owned and installed by the employee will fall foul of the duality rules that disqualify the whole rental charge for tax relief purposes.
  4. Employees will not be taxable on the provision of free or subsidised meals provided by the employer on the business premises in any canteen where meals are provided for the staff generally, or on the use of any ticket or token to obtain such meals, if the meals are provided on a reasonable scale and either:
    1. all employees may obtain free or subsidised meals on a reasonable scale, whether on the employee’s premises or elsewhere
    2. the employer provides free or subsidised meal vouchers for staff for whom meals are not provided.

Point 4 does not apply to restaurants or hotels that provide free or subsidised meals to employees in a facility where meals are being served to the public, unless the meal is served in a part of it designated for staff use only. If the employer provides directors with their own dining room, the costs of the meals provided may not be taxable if other employees are provided with a similar facility, for example a canteen.

HMRC may in practice apply the principle to expenditure on food provided at technical and training meetings that employees attend. This is an unpublished practice and should be agreed with HMRC in advance. Expenditure must be reasonable and no alcohol should be provided.
HMRC will normally grant dispensations for business entertaining expenses.

Payments for use of home telephone & broadband

Employers must enter the full costs of line rental and all private calls associated with home telephones that that have been reimbursed to their employees, if the phone line is in the employee’s name, Class 1 NIC’s would also be due on these reimbursements.

However if the employer paid for a second line in the employee’s home to be used purely for business purposes, no tax or NIC liabilities would arise.

Information required

The cost of all home telephone bills reimbursed or paid directly by the employer on behalf of the director, employee or member of his family or household, any amounts made good or which have suffered a tax deduction, and the cash equivalent.

Measure of expense

This is the cost of all private calls and the full rental charge.

Practical points

  1. Any telephone owned and installed by the employee will fall foul of the duality rules that disqualify the whole rental charge for tax relief purposes. A possible way around the problem is to have a separate line installed for business purposes, although this would normally be appropriate only where a separate line is advantageous for commercial reasons. A telephone provided by the employer for work purposes would however escape both tax and NIC even if insignificant private use arose.
  2. Class 1 NICs are payable on personal telephones on both rental and calls not identified as business, or if no dispensation exists. It is appropriate to pass the rental and private calls through the payroll for NICs purposes or include them in a PSA.

Non-qualifying relocation expenses

This section only applies to relocation expenses that do not qualify for tax relief. Report qualifying expenses and benefits at section J Non-qualifying benefits and qualifying expenses paid late are reported at section M (brown box) above.

Information required

All expenses payments that do not qualify for relief, any amounts made good or which have suffered tax deductions and the cash equivalent.


Measure of expense

An employee will suffer tax on the amount reported because it does not qualify for relief. Non-qualifying items include compensation payments for the loss on sale of the former home, additional housing cost allowances and forwarding post. If qualifying expenses amount to £8,000 or more, then the full amount of any bridging loan interest is taxable. There is a complicated formula for calculating how much relief will be given for bridging loan interest if the £8,000 limit is not utilised fully by qualifying expenses and benefits.


Practical point

Cash payments that do not qualify for relief (e.g. a lump sum paid for loss on sale of former residence) should be subjected to PAYE/NICs at the time of payment. Expenses paid to an employee in connection with relocation that are of a type that does not qualify for exemption should not be disclosed on Form P11D. Such expenses are liable to PAYE Income Tax and Class 1 NICs and should be included through payroll at the time of payment. This should be contrasted with non-exempt relocation expenses that the employee should have paid but were instead met by the employer. Such expenses should be disclosed on P11D (blue box) and Class 1 NIC is payable. These costs should be passed through payroll for NIC purposes only, or included in a PSA. However, HMRC may agree to include a lump sum disturbance allowance in a dispensation.

Other expenses

This is the final catch-all section to report any items not previously reported elsewhere on the P11D form unless they are exempt from tax by statute or are included in a dispensation.

Examples of what can be entered here include:

  • National Insurance contributions
  • Ancillary services provided with living accommodation
  • Private accountancy bills
  • Employee's legal fees
  • Wages for personal or domestic staff e.g. chauffeuring costs
  • Cost of work carried out at the employee's own home or on their property by the employer's workers or contractors.
  • Employee’s traffic and parking fines

P11D Form: Section N

P11D (Guide) Section N

Expenses payments made on behalf of the employee

Take care not to enter amounts that are entered in section C of the P11D.

Travelling and subsistence payments

Enter the total non-exempt expenses reimbursed on items such:

  • fares
  • hotels
  • meals

This includes travel between home and a permanent workplace for UK employments and employments performed wholly outside the UK not included above.

Read chapters 8, 9 and 10 of booklet 480 - an expenses and benefits guide for further information.


Enter all payments made exclusively for entertaining including:

  • the amount of any round sum allowance

  • sums reimbursed

  • specific allowances for entertaining

  • sums paid to third persons.

If you carry on a trade, business, profession or vocation and make payments to a director or employee exclusively for entertainment, the payments should be disallowed when working out your tax liability.

Read chapter 20 of booklet 480 - expenses and benefits guide for further information.

Trading organisations other than tonnage tax companies

If you carry on a trade, business, profession or vocation:

  • tick the box if any of the expenses payments have been, or will be, disallowed in your business’s tax computations
  • put a cross in the box if none of the expenses payments have been, or will be, disallowed in your business’s tax computations

Tonnage Tax companies

Tick the box if you have elected for your company’s profits to be calculated in accordance with paragraph 4, Schedule 22 Finance Act 2000.

Home Telephone

Enter any expenses reimbursed in connection with a telephone at the home of the employee where the employee contracted directly with the supplier.

If you contracted with the supplier to provide a home telephone to your employee, enter any expenses paid by you at sections K, L or M of the P11D.

Read appendix 1 of the Class 1A National Insurance contributions on benefits in kind (CWG5) guide for further information.

Other non-qualifying relocation expenses payments

Enter any amounts that your employees should have paid, but you paid instead, in connection with a relocation, where the expense was not an exempt expense (not listed in appendix 7 of booklet 480 - an expenses and benefits guide).

Read chapter 5 and appendix 7 of booklet 480 - an expenses and benefits guide and paragraph 32 in part 5 of the Class 1A National Insurance contributions on benefits in kind (CWG5) guide for further information.

Incidental overnight expenses

Go to the box under ‘Incidental overnight expenses’ at section M of the P11D for details of prescribed limits. Enter details in box N of incidental expenses payments exceeding the prescribed limits which are made up of a cash payment, non-cash vouchers or a credit card payment.

Read chapter 8 and appendix 8 of booklet 480 - an expenses and benefits guide and paragraph 31 in part 5 of the Class 1A National Insurance contributions on benefits in kind (CWG5) guide for further information.

Other expenses

Enter details of expenses incurred in, or in connection with, the provision for the director or employee of any benefits or facilities of whatever their nature not returned under any previous heading.

Additional HMRC Documentation and external help

Click the links below to go directly to the HMRC website to download or view the PDF or help files listed below.


HMRC P11D Guide

Importing Data

Entering Data Manually