When paying any professional fees or subscriptions to professional bodies on behalf of your employees, check that your organisation is among those which receive tax relief from HMRC.
This can be checked on the approved professional organisations and learned societies list found on HMRC’s website as follows:
Form P356 should be used to apply for inclusion on the list of professional bodies and learned societies approved for tax relief (list 3).
This will indicate whether a tax exemption can be applied.
The basis of taxation will depend on whether the invoice is made out to the employee or the employer. Taxation of expenses relating to professional subscriptions and fees is covered under the Income Tax (Earnings and Pensions) Act 2003.
Should your business type not be included in HMRC’s list 3, the payment must be included in the gross pay and subject to both PAYE Income Tax and Class 1 NI.
If the employee pays directly to an organisation which is included in the list on HMRC’s website as earlier indicated and you have no dispensation to exempt you from reporting the payment, the cost needs to be added to your employee’s earnings, it needs to be included in the gross earning and PAYE income tax will need to be deducted. This type of payment is subject to Class 1A P11D (employer’s NI only).
Pay & Benefits magazine