Employment and benefits Ch 16-21 Flashcards
When are EE’s taxed on earnings?
On receipt/ earlier of:
Date payment physically made
Date employee becomes legally entitled to payment
(normally the same for EE’s-would probably be VERY clear in Q if not)
What is the third rule for directors?
a. when sums are credited in company accounts
b. at the end of the accounting period if earnings have been determined by that period
c. at the date earnings are determined if falls after the end of the company accounting period.
Learnings from Pepper and Hart on EE benefits?
Cost means the marginal cost
What benefits cannot be payrolled?
Loans and accomodation
When must details about payrolled benefits be given to ee’s?
By 31 May following the end of the tax year
Examples of taxable social security benefits?
Jobseekers, incapacity, carers, employment & support allowance
What is the niche rule for accessories bought later (company cars)?
Only include in list price if >100
What is the max capital contribution (company cars)?
5000
What does the non availability deduction only apply to?
If the car was off the road for 30 days
What is used instead of list price for classic cars?
Market value- 15 years or older and worth 15000 or more at end of tax yr
What is the fuel benefit?
25300
What is exempt in respect of electric cars?
workplace charging point or point installed in EE’s home
When is living accomodation job related?
Necessary
For better performance of job and customary
provided due to threat of security
Accomodation benefit when rent paid by ER?
Higher of rent paid and annual value.
If they have paid a lease premium for lease <10 yrs additional amount of ‘rent’: lease prem/length of lease
Expensive property charge?
cost (plus improvements before start of ty)-75000 x ORI at start of year
When is MV used in accomodation expensive property formula?
When is has been more than 6 years between purchase and moving in. NOTE if OG cost less than 75k DOES NOT MATTER WHAT MV IS NOW THERE IS NOT A CHARGE!!!
Household expenses if in job related accomodation?
Benefit from these is limited to 10% of other earnings from the employment. Council tax and water charges are exempt.
What does the 10,000 loan rule apply to?
Aggregate of all loans to that EE.
Interest on qualifying loans if loan given by ER?
Is ignored because the benefit and the amount qualifying for tax relief would net off.
Interest on qualifying loan given by ER if only PARTIALLY used for qualifying purposes?
The full amount of cheap interest is a benefit and then the qualifying aspect is deducted on a tax comp
Do the loan rules just apply to loans by ER’s?
No bc all included parent co, subs and future er
What happens when a loan is written off?
Treated as earnings (not of ee dies)
Use of asset rule
Higher of:
-rents paid by ER
-20% x mv when first available
Can use of asset rules take into account when it is available to more than one EE?
Yes (on a just and reasonable basis)
Assets transferred?
Higher of:
-MV when given
-OG MV less amounts already charged to tax
Asset transferred rules for cars and houses?
MV less any amounts paid by EE’s
If a computer is used partially for business and partially for personal?
Calculate the benefit using 20% rule and then deduct the business portion
BUT NOT if the private portion is insignificant (ERs should have a policy permitting incidental private use of computer equipment)
Are 0 emission vans exempt?
Yes
What is the van and fuel benefit?
3600 for van and 688 for fuel. no benefit if insignificant private use or restricted private use (i.e no private use unless for commuting). No partial reduction in fuel for contributions (like cars).
Phone exemption rule?
One phone, in the employers name (NOT to a family meber).
What are mileage reimbursements for?
Business mileage in EE’s own car APART from passenger payments which also apply to company owned vehicles (5p pp)
Provision by ER of creche or nursery
Exempt
When did the childcare scheme finish?
4 oct 2018
Childcare scheme BEFORE 6 april 2011?
55PW for everyone
Childcare scheme ON AND AFTER 6 april 2011?
BR-55
HR-28
AR-25
ER will make a calculation at the start of the tx yr for purposes of the bands (do not include discretionary bonuses -bonuses which may or may not happen- in this) (calc is not redone if payrise/unexpected earnings drip during yr).
What are the limits for incidental expenses for working away from home?
5 in UK, 10 abroad
additional costs of WFH under homeworking arrangement
exempt
first 500 of pensions advice per tx yr
exempt
For staff canteens to be exempt they must be…
open to all employees
staff suggestion scheme awards
exempt up to 5000
long service awards?
exempt up to £50 per year of service, as long as have been working there 20 years
trivial benefit threshold for directors of close companies
£300
What are type A optional remuneration agreements?
EE gives up salary for a non cash benefit
What are type B optional remuneration agreements?
EE chooses to receive benefit rather than salary (think barb)
what happens when salary is sacrificed for exempt benefits?
Taxed on the amount given up
What is exempt from OPRA rules?
cars with co2 emissions <75g, pensions advice up to £500, cycle schemes, er provided childcare, pensions, trivial benefits, subsidized canteens.
What is the tax award scheme?
Provider of an incentive award accounts to HMRC for the tax due at 20/40% on a grossed up basis. The gross amount goes in the tax comp and then deduction allowed. EE’s should be provided with a certificate which has this on it.
What does a deduction under s336 mean?
-employee OBLIGED to incur the expense as holder of the employment
-amount incurred wholly, exclusively and necessarily in the performance of duties.
what is deductible under S337?
travel expenses- e.g to temp workplace. NOT ordinary commuting
when can a client entertaining deduction be claimed?
-has been disallowed in the ERs tax comp
-ee has physically received that amount via reimbursement or a SPECIFIC round sum
Things to consider when thinking if something is a permanent or temporary workplace?
-likely to be considered permanent if 40% or more of time spent there
-permanent if 24 month rule (only relevant where there is a ‘period of continuous work’ breached (remember it is when they have decided it will be breached)
what is included in s337 as costs of travel?
accomodation and food
what are the learnings from Brown and Bullock case law?
subscriptions need to be necessary to the job/so that you couldnt do your job without it i.e not a membership to a restaurant where you sometimes win client.
Must be paid to an approved body and be relevant to/benefit the persons job.
what type of charitable donation is deducted when coming to net income?
payroll giving scheme/deduction scheme/GAYE scheme
are insurance indemnity policies tax deductible?
yes (assume only if necessary for the profession)
When are reimbursements exempt from tax?
If the employee would be able to get a deduction for then when doing their tax return.
how does it work with round sum allowances?
Taxable in first instance and then claim deductions to get to the profit element (remember the rule about client ent-no deduction unless specific round sum)
smith v abbott
journalist buying newspapers- wasnt deductible as not for the performance of duties but to qualify him to perform those duties
hillyer v leeke
no deduction for wear and tear on suits he had to wear for work as he also had to wear them for personal reasons (warmth and decency!!)
humbles v brookes
history teacher claimed a deduction for the cost of attending weekend lectures to improve his knowledge-not allowable.
Medical insurance for when need for treatment arises while abroad?
Exempt (think david yarrow!)
scholarship awards when paid to directors children?
taxable
When is an ‘advance’ exempt?
If below 1,000, spent within 6 months and employee accounts to er at regular intervals for advnace obtained.
loans by banks to ee’s at normal commercial rates
not taxable benefit
