Title: BENEFITS IN KIND all employees
1BENEFITS IN KIND all employees
Theory and practice of taxation A Module Code
C33TA1 Lec7
2BENEFITS 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
3BENEFITS 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
4BENEFITS 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
5BENEFITS 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
6BENEFITS 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)
7BENEFITS 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.
8BENEFITS 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.
9BENEFITS 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.
10BENEFITS 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.
11BENEFITS 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
12BENEFITS 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.
13BENEFITS 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.
14BENEFITS 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.
15BENEFITS 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.