BENEFITS IN KIND all employees

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BENEFITS IN KIND all employees
Theory and practice of taxation A Module Code
C33TA1 Lec7

• MISCELLANEOUS

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BENEFITS IN KIND all employees MISCELLANEOUS 1

• LONG SERVICE AWARDS
• Generally taxable
• BUT
• Non-cash awards are exempt IF
• Period of service was 20 years or more
• No similar award has been made in past 10 years
• Cost does not exceed 50 per year of service

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BENEFITS IN KIND all employees MISCELLANEOUS 2

• SUGGESTION SCHEMES
• Generally taxable BUT an Extra-statutory
  concession exempts awards where
• There is a formal scheme open to all employees on
  equal terms
• Suggestion is outwith the scope of the employees
  normal duties
• Either the award is 25 or less OR it is not made
  until after implementation of the suggestion
• Awards gt 25 reflect the importance of the
  suggestion And either
• Do not exceed 50 of the expected net benefit
  during the 1st year of implementation OR
• Do not exceed 10 of the expected net financial
  benefits over a period of up to 5 years
• Awards gt 25 are shared equitably between
  employees making the same suggestion
• If the award exceeds 5,000 the excess is taxable

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BENEFITS IN KIND all employees MISCELLANEOUS 3

• REMOVAL EXPENSES AND BENEFITS
• Includes Legal/Estate agents fees surveys
  temporary accommodation, transport of property
  interest on bridging loans, etc
• NO TAXABLE BENEFIT ON FIRST 8,000 OF SUCH
  EXPENSES
• (Any excess is taxable)
• PROVIDED
• Employee does not already live within reasonable
  travelling distance of his new employment and
  will do so when he moves
• Expenses are incurred/benefits provided by the
  end of the tax year following the tax year of the
  start of the new employment

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BENEFITS IN KIND all employees MISCELLANEOUS 4

• WORK RELATED BENEFITS
• The cost of a work place nursery is not taxable
  BUT
• Cash/vouchers supplied to obtain nursery
  facilities are taxable
• Sports/Leisure facilities available to employees
  and not available to the general public are
  generally not taxable benefits BUT
• Membership fees for sports clubs are taxable
• Generally no benefit arises on assets or services
  used in performing the duties where any private
  use is insignificant
• Welfare counselling etc is exempt if the benefit
  is available to all employees

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BENEFITS IN KIND all employees MISCELLANEOUS 5

• BICYCLES AND MOTORCYCLES
• Employers may pay a tax-free sum to employees who
  use their own
• bicycles - 20p per mile or
• motor cycles - 24p per mile
• cars and vans- 40p per mile (each mile over
  10,000 25p per mile)
• on business travel
• If the employer does not make a payment the
  employee may claim the tax-free amount (or any
  balance)
• there is no taxable benefit re any bicycle and
  bicycle safety equipment, supplied to employees
  by an employer (provided they are supplied to
  employees generally)

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BENEFITS IN KIND all employees MISCELLANEOUS 6

• TRAVEL
• There is NO taxable benefit in respect of
• Work buses
• Subsidies to public bus services
• These are exempt benefits
• Transport/overnight costs where public transport
  is disrupted by industrial action
• Late night taxis
• Travel costs exceptionally incurred where car
  sharing arrangements break down.

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BENEFITS IN KIND - Higher paid employees and
directorsMISCELLANEOUS 1

• VANS AND HEAVIER COMMERCIAL VEHICLES
• If a van (of normal maximum laden weight up to
  3,500kg) is made available for an employees
  private use, there is an annual scale charge of
  500, or 350 if the van is at least four years
  old at the end of the tax year.

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BENEFITS IN KIND - Higher paid employees and
directorsMISCELLANEOUS 2

• OTHER ASSETS MADE AVAILABLE FOR PRIVATE USE
• Assets made available are taxable on an annual
  value of 20 of the market value when first
  provided as a benefit to any employee, or on the
  rent paid by the employer if higher.
• If the asset is subsequently sold to the employee
  the taxable benefit on acquisition is the greater
  of
• Current market value minus price paid by the
  employee OR
• Market value when first provided minus any
  amounts already taxed (ignoring any contributions
  made by the employee) minus the price paid by the
  employee.

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BENEFITS IN KIND - Higher paid employees and
directorsMISCELLANEOUS 3

• EXAMPLE ASSETS MADE AVAILABLE FOR PRIVATE USE
• A suit costing 400 is purchased by an employer
  for use by an employee on 6 April 2005. On 6
  April 2006 the suit is purchased by the employee
  for 30, its market value then being 50.

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BENEFITS IN KIND - Higher paid employees and
directorsMISCELLANEOUS 4

• The benefit in 2005-06 is 400 X 20
  80
• The benefit in 2006-07 is 290, being the greater
  of
• 
  
  
• (a) Market value at acquisition by employee
  50
• Less price paid
  
  30
• 
  
  20
• 
  
  
• (b) Original market value
  
  400
• Less taxed in respect of use
  
  (80)
• 
  
  320
• Less price paid
  
  (30)
• 
  
  290

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BENEFITS IN KIND - Higher paid employees and
directorsMISCELLANEOUS 5

• COMPUTER EQUIPMENT
• The first 500 of any benefit which arises under
  the above rules in respect of computer equipment
  made available for the private use of an employee
  or a member of his family/household is exempt.
• If the benefit exceeds 500, the excess is
  taxable.

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BENEFITS IN KIND - Higher paid employees and
directorsMISCELLANEOUS 6

• ASSETS SOLD TO EMPLOYERS
• If an employee sells an asset to his employer
  (for example his house when he is being
  relocated), there is a taxable benefit of the
  amount paid minus the market value of the asset.
  If the employer pays his own transaction costs
  (for example solicitors fees), they do not count
  as a taxable benefit. However, if the employer
  pays the employees transaction costs, there is a
  taxable benefit unless a specific exemption (for
  example the removal expenses exemption) applies.

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BENEFITS IN KIND - Higher paid employees and
directorsMISCELLANEOUS 7

• PAYE TAX LIABILITIES
• If a company pays any tax which should have been
  deducted from a directors (not an employees)
  remuneration under PAYE but was not so deducted,
  any amount not made good by the director is a
  taxable benefit.
• Directors with no material interest in the
  company (that is, not more than 5) who are full
  time working directors or who work for non profit
  making or charitable companies are excluded from
  this rule.

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BENEFITS IN KIND - Higher paid employees and
directorsMISCELLANEOUS 8

• MEDICAL SERVICES AND INSURANCE
• The cost of medical diagnosis and treatment
  provided by an employer is a taxable benefit,
  except for the cost of routine check-ups.
• Private medical insurance premiums are also
  taxable benefits, except for premiums or extra
  premiums to cover treatment when the employee is
  outside the UK in the performance of his duties.