Income from Employment

Question 1

Use Benefit

Answer 1

1. Monetary value of benefit = Market Value when first issued × 20% × Period of Use

Less: Any rent paid by employee

Question 2

Gift Benefit

Answer 2

Higher of:

1. Net Market Value (at first use) after use benefits
2. Market Value at gift date

Question 3

Living Accomodation Benefit

Answer 3

OWNED BY EMPLOYER?
Annual value

RENTED BY EMPLOYER
Higher of Rented Value and Annual Value

Less Employee Benefit

Question 4

Additional Living Benefit
Home bought more than 6 years before employee use

Answer 4

(MARKET VALUE - £75,000) × Official Rate of Interest

Market Value at the time it was first given to employee

Question 5

Additional Living Benefit
Home bought less than 6 years before employee use

Answer 5

(Cost - £75,000) x Official Rate of interest

Question 6

MOTOR CARS - List Price

There must be private use for a benefit to arise

Answer 6

Maximum reduction: £5,000

Even if the employee contributed more than maximum

Question 7

Motor Car Benefit

Answer 7

(List price - Capital Contribution) × %

Question 8

Emissions above 55g

Answer 8

Maximum Percentage: 37%

+1% per 5g

+4% for Diesell not meeting RDE2 standards

Question 9

Conditions for reduction in car benefit

Answer 9

1. Unavailable for 30 days + of the tax year
2. Employee makes contribution to running cost
   NB Not the same as capital contribution

Benefit - Running Cost

Question 10

Fuel for a Private Use of Company Vehicle

Answer 10

Use same % as car benefit

No reduction if the employee contributes towards the cost of petrol

No charge if he pays for all fuel used

Question 11

Vans and Heavier Commercial Vehicles

Answer 11

Insignificant Use? - No Benefit

Significant Private use - £3,600 pa
Fuel - £688 pa

0 CO2 emissions have zero benefits

Question 12

Beneficial Loan

When an employer gives an employee a loan at an interest rate cheaper than the official interest rate

Answer 12

£10,000 or less - No Benefit arises

Otherwise benefit of full amount

Question 13

Beneficial Loan Value 1
Average Method

Answer 13

(Loan @ start + Loan @ end)/2*official interest rate

Automatically applies

Question 14

Beneficial Loan Value 2
Strict Method

Answer 14

Find interest payable for actual loan

May be elected by either HMRC or taxpayer if it’s beneficial for them

Question 15

Beneficial Loan

Answer 15

Interest Payable under elected method

Less

Actual Interest Paid

Question 16

OTHER BENEFITS
General Assumptions

Answer 16

If the employee is using something for personal use and the employer is paying for it, then the benefit is the COST to Employer

Question 17

Working from Home

Answer 17

£6 per week without evidence

> £6 per week - evidence of employee actual cost needed

Question 18

Relocation Cost

Answer 18

£8,000 exempt

Question 19

Authorized Mileage

Answer 19

employee uses their own car on employer’s business.

Mileage allowance compensates for additional costs of running the vehicle due to business miles.

The amount that can be received tax free is set by HMRC.

Excess allowance is taxable

Under allowance is deductible.

Question 20

Travelling between home and work

Answer 20

does not count as business miles

Question 21

Travelling to a temporary workplace
( A temporary workplace is one that you attend irregularly or for less than 24 months.)

Answer 21

will count as business miles

Question 22

Travelling between work and client’s offices

Answer 22

will count as business miles

Question 23

Occupational Pension Scheme & Travel

Answer 23

Contributions to an occupational pension scheme.

Travel, subsistence and entertaining incurred wholly, exclusively and necessarily in the performance of duties of employment

Question 24

Allowable Deductions 2
Subscriptions and Deficit on Mileage allowance

Answer 24

Subscription to a professional body (e.g.) ACCA

Deficit on a mileage allowance Topic: The authorized mileage allowances

Question 25

Donations to charity

Answer 25

Donations to charity

Note that Donations to political parties are not allowable deductions.

Question 26

Plant and Equipment provided by employee

Answer 26

Capital allowances are available for plant and machinery provided by an employee for use in his duties Topic: Capital allowances

Question 27

Emoluments are taxable on the earlier of 2 dates:

Answer 27

When a person becomes entitled to payment of the earnings

When payment is made

Question 28

Employed or Self Employed?

Answer 28

Integral Position
Risk
Control
Legal Right
Equipment
Exclusivity

Question 29

Telephone Benefit?

Answer 29

First Phone is Free
Apply USE BENEFIT for additional phones!

Question 30

health club membership Benefit?

Answer 30

Taxable - Cost to Employer

Question 31

Private incidental expenses

Answer 31

exempt up to £10 per night when spent outside the UK

Within UK £5 per night

Question 32

workplace nursery

Answer 32

The provision of a place in a workplace nursery does not give rise to a taxable benefit.

Question 33

A non-cash long-service award

Answer 33

not a taxable benefit if it is for a period of service of at least 20 years, and the cost of the award does not exceed £50 per year of service

Question 34

Employer pays medical costs

Answer 34

Up to £500 is Not taxable if treatment is provided to an employee to assist them to return to work after a period of absence due to ill-health or injury.

Question 35

Provision of a parking place at or near an employee’s normal place

Answer 35

exempt benefit for income tax.

Question 36

Employers must send income tax and NIC information to HMRC electronically every time employees are paid

Answer 36

22nd of the month under the Real Time Information reporting system.

Know Penalties