Employee equipment allowance

Where your employees use equipment for work which they personally own or rent, you can reimburse them the business element of their costs tax and NI free. Quantifying the amount you can pay without having to apply PAYE can be tricky especially where there is personal as well as business use of the equipment.

WHEN TO USE THIS DOCUMENT

When you make a contribution to the costs incurred by an employee in providing equipment for use in their job they can use this document to help calculate a reasonable claim that can be paid tax and NI free. 

Note that while you can pay the allowance without deducting PAYE tax and NI the employee must declare the payment on their tax return and may be liable to pay tax through self-assessment or HMRC informal demand (Form P800).  

HOW TO USE THE DOCUMENT

Employees should follow the instructions given on the form each time an equipment allowance is to be claimed. It can be used for any period of time; there is no maximum or minimum.