Employment Income Flashcards
What are some exempt benefits of employment tax?
- Free / subsidised onside canteen
- Workplace nurseries / childcare
- Use of bicycles
- Sports facilities available to employees but not the general public
- Mobile phone (one per employee only)
- Up to £150 per head for social events - If the event costs more than £150, the full amount is taxable, not the excess. The party must be an annual event in order to qualify.
- Removal expenses up to £8,000 (eg relocation expenses) - excess is taxable
- Job related accommodation
what is a trivial benefit and give an example
A benefit is classed as trivial if it:
- costs no more than £50 and
- is not cash (or a cash voucher) and
- is not provided in recognition of services.
Common examples of trivial benefits are wedding presents and gifts when an employee has a baby.
what is voluntary payrolling?
employers can report the value of benefits via the RTI system and treat the cash equivalent of the benefit like a salary, so that the relevant tax is deducted from the employee under PAYE.
when can a penalty be applied?
Employers must submit PAYE information on or before the day the employee is paid, using a Full Payment Submission (FPS).
The common penalty regime applies if errors are made in the FPS.
Penalties can also be applied if ether the FPS or the payment to HMRC is late.
when is a bonus deemed to be received?
earlier date on which:
- The bonus is paid
- the individual becomes entitled to payment
what is the general rule if there is no specific rule for calculating the benefit
taxed on the marginal cost to the employer less any contributions made by the employee
What are the three conditions for trivial benefits?
- Cost doesn’t exceed £50
- It is not cash or a cash voucher
- It is not provided in recognition of services
(there is an annual £300 cap in respect of benefits to certain directors)
What are the criteria for accommodation being non-taxable?
- Necessary for performance of duties (eg a nanny)
- Customary to be provided (eg prison governor, flight attendant)
- Provided for security (eg soldier barracks, prime minister)
What must be met in order for a director to qualify for necessary or customary job related accommodation?
- The director owns no more than 5% of shares
- The director is a full-time working director (unless the company is a charity/non-profit making)
The taxable benefit for rented accommodation is the higher of what?
- The annual or rateable value
- The rent paid by employer
Note this is then less the contribution of the employee, if applicable and time apportioned
what is the taxable benefit if the accommodation of owned by the employer?
the basic benefit is the rateable value
what is the additional benefit if the cost of the house exceeds £75,000?
(cost - 75000) x official rate of interest at start of the tax year
What are some of the terms determining the ‘cost’ related to owned accommodation?
- Generally the original value of employer purchasing
- If the property has been owned more than 6 years before the employee moves in, the ‘cost’ is taken at market value
- Capital improvements from prior tax years should be included in the ‘cost’ (not the current tax year)
- Employee contributions are deducted from the value of the benefit
What is the official rate of interest from 6th April 2023?
2.25%
What is the taxable benefit for living expenses associated with accommodation?
Cost to employer less any employee contribution
What does a single car benefit charge cover?
- Running costs
- Insurance
- Maintenance
- Road Tax
what is an ancillary benefits?
- related living expenses paid for by the employer eg heating,light
- use cost to employer - employee contributions
- if employer pays for bills then taxable
