Expenses and benefits: holidays
What to report and pay
What you have to report to HM Revenue and Customs (HMRC) depends on who arranges and pays for the holiday.
Holiday vouchers
If you provide your employees with vouchers they can exchange for a holiday, you must:
- report the cost on form P11D
- deduct and pay Class 1 National Insurance (but not PAYE tax) on the cost to you of the vouchers
Holidays you pay for directly
If you arrange the holiday, you must:
- report the cost on form P11D
- pay Class 1A National Insurance on the cost to you
If your employee arranges the holiday, you must:
- report the cost on form P11D
- deduct and pay Class 1 National Insurance (but not PAYE tax) on the cost to you
Holidays your employees arrange and pay for, and you pay them back
This counts as earnings, so you’ll need to:
- add the amount you pay the employee to their other earnings
- deduct and pay PAYE tax and Class 1 National Insurance through payroll
Salary sacrifice arrangements
If the cost of the holiday is less than the amount of salary given up, report the salary amount instead.
These rules don’t apply to arrangements made before 6 April 2017 - check when the rules will change.