Employee equipment allowance

Where your employees use personally owned or rented equipment for work, 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 and 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 our document to help them calculate a reasonable claim that can be paid tax and NI free. 

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 an HMRC informal demand (Form P800).  

How to use this document

Employees should follow the instructions given on the form each time an equipment allowance is claimed. There is no maximum or minimum period of time.