Employment Income Flashcards
General earnings are taxed on
a receipts basis
General earnings of money are treated as received on
Earlier of time payment made;
time person becomes entitled to payment
If recipient director, general earnings are treated as received on earliest of
Time payment made
time become entitled
date earnings credited in records/accounts
end of period of account (if earnings determined before period ends)
Date of earnings determined if the amount is not determined until after POA
If directors payments approved at AGM
- Normally earnings determined on date
- if directors controlling shareholders, considered received on the date directors agree earnings, not formal ratification
Net taxable earnings
Total taxable earnings - total allowable deductions
Deduct against general earnings for expenses if
Paid by employee
Paid on employee’s behalf by someone else and is included in the earnings
General rule for deducting employee expenses 2 conditions
- employee is obliged to incur and pay expense as holder of the employment
- amount is incurred wholly, exclusively and necessarily in the performance of the duties of the employment
employment allowable/disallowed
council tax, water rate, mortgage interest if WFH
Not allow deduction
Deduct travel and subsistence expenses if
- necessarily incurred in performance of duties of the office/employment
- expenses not expenses of ordinary commuting or private
Travelling home to work is
not allowable unless
- no normal place of work
- taxpayers home is work location
- employee works temporary workplace for no more than 24 months
Entertaining expenses can be deducted if
they were incurred wholly, exclusively and necessarily in the performance of duties of the employemnt
If employee reimbursed for actual entertaining expenses, the reimbursement is xxx income for the employee
Exempt
employer disallows in tax computation
If employee given specific entertaining allowance this is…
Included in general earnings and can deduct actual expenses from allowance. excess is taxable as general earnings
Subscription to professional bodies paid by employee are
deductible if relevant to duties and body on HMRC list
Taxable benefit
Vouchers - Cash voucher
Cash obtainable cost to employer - amount paid by employee
Taxable benefit
Living accommodation
Not a benefit if job related, otherwise benefit on annual value / rent paid and additional over 75k
Cost of living accomodation
- Original amount paid
or if provided more than 6y after purchase MV when first provided
+ capital improvements made before start of tax year
Taxable benefit
Expenses connected with provision of living accomodation
Taxable on cost to employer - amount paid by employee
Taxable benefit
Cars and fuel for private use
Based on Co2
Taxable benefit
Vans for rprivate use
£3,600 flat for van, less contributions
reduced flat rate for zero emissions £0
£688 for private fuel
Taxable benefit
Assets made available for private use
Taxable
20% of MV when first provided less any amount payable
Taxable benefit general rule
Cost to employer of provision - any amount paid by employee
Taxable benefit General - in house
Marginal cost to employer - amount paid by employee
If employee makes payment for receiving benefit, taxable value reduced when employee makes payment by
6 July following end of tax year
Voluntary payrolling definition
Employers may voluntarily opt to process certain benefits (car, van, fuel and medial insurance and subscription) through payroll, tax paid through PAYE
Living accommodation - provision of furniture
20% of market value when first provided for use
If accomodation job related, additional expenses are limited to
10% net earnings
