One would not wish to get involved in the politics of where the funds for Boris’s flat refurbishment has come from, we will leave that down to HMRC to investigate, but what we will do in this article is take the opportunity to outline what expenses employers are able to cover for employees without getting on the wrong side of HMRC.
The full list of benefits alongside their individual exemptions can be found here:
In general, something only counts as a business expense if your employee needs it to do their job. You do not have to deduct or pay tax and National Insurance on qualifying business expenses, but you need to make sure that they meet all of HM Revenue and Customs’ criteria
Costs relating to business travel also count as business expenses unless the travel is in the employee’s own vehicle. If the travel is in the employee’s vehicle, you need to ensure you reimburse those business miles in accordance with the approved amount (this year 45p up to 10,000 miles and 25p thereafter).
You can find more guidance here:
Accommodation at the place of work is allowable if:
- your employees can’t do their work properly without it, for example agricultural workers living on farms
- an employer is usually expected to provide accommodation for people doing that type of work (for example a manager living above a pub, or a vicar looking after a parish)
- if it’s needed for security due to the type of work they do means there’s a threat to their safety.
Where an employee is provided with job- related living accommodation by reason of his employment there is a limit to the amount of taxable benefit on certain other benefits which he may also be provided with. The benefits are:
- heating, lighting and cleaning the premises
- repairs to the premises, their maintenance or decoration
- the provision of furniture, equipment or other items which are normal for domestic occupation.The limit applying to the total of all such benefits is 10% of the net amount of the earnings from the employment less any contribution made by the director or employee to the person incurring the expenditure.
As an employer, lending or hiring bikes to employees doesn’t count as an expense or benefit – as long as they’re available to all employees and mainly used for getting to work.
You can use this to set up a ‘cycle to work’ scheme to encourage employees to travel to and from work by bike:
Safety Clothing and Uniforms
You don’t have to pay tax and National Insurance on most uniforms or protective clothing, but you may still have to report these expenses to HMRC.
If you provide equipment, services and supplies to an employee who works from home, you do not have to report or pay anything if they’re only used for business purposes, or any private use is insignificant.
Additional household expenses
If you cover the cost of additional household expenses for an employee who works from home, you do not have to report or pay anything if all the following apply:
- they need to work from home, either because equipment they need is not available at your workplace, or their work means they have to live too far away from your workplace to travel there every day
- the amount you give them is not more than their additional household expenses
- the amount you give them is not more than the current weekly limit.
Weekly tax limits
|Tax years||Weekly limit|
|2020 to 2021 onwards||£6.00 (or £26 a month for employees paid monthly)|
|2012 to 2013 — 2019 to 2020||£4.00 (or £18 a month for employees paid monthly)|
You don’t have to report or pay anything to HM Revenue and Customs (HMRC) if you pay no more than:
- £5 per night for travel within the UK.
- £10 per night for travel outside of the UK.
Long service awards
You don’t have to report or pay on a non-cash award to an employee if all of the following apply:
- They’ve worked for you for at least 20 years.
- The award is worth less than £50 per year of service.
- You haven’t given them a long-service award in the last 10 years.
For example, you can give a non-cash award with a value of up to £1,000 for 20 years’ service.
These are exempt if they are required by health and safety legislation for employees who use a computer monitor or other screen.
Glasses or contact lenses
These are exempt if you have to provide them for monitor or screen work.
Benefit in Kind information
If you have provided a employee benefits or expenses outside of these rules, for example you provide your employee with a company car, health insurance or any expense used for personal use, then you’ll need to complete a P11D for that employee.
Chippendale and Clark will be able to quote you for this additional service. The P11D must be submitted before 6th July following the Tax year the benefit had been received.
Please contact Chippendale and Clark if you believe you have provided your employee with a benefit in the year and therefore needs reporting on a P11D.
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