Employment and benefits Ch 16-21

Question 1

When are EE’s taxed on earnings?

Answer 1

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)

Question 2

What is the third rule for directors?

Answer 2

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.

Question 3

Learnings from Pepper and Hart on EE benefits?

Answer 3

Cost means the marginal cost

Question 4

What benefits cannot be payrolled?

Answer 4

Loans and accomodation

Question 5

When must details about payrolled benefits be given to ee’s?

Answer 5

By 31 May following the end of the tax year

Question 6

Examples of taxable social security benefits?

Answer 6

Jobseekers, incapacity, carers, employment & support allowance

Question 7

What is the niche rule for accessories bought later (company cars)?

Answer 7

Only include in list price if >100

Question 8

What is the max capital contribution (company cars)?

Answer 8

5000

Question 9

What does the non availability deduction only apply to?

Answer 9

If the car was off the road for 30 days

Question 10

What is used instead of list price for classic cars?

Answer 10

Market value- 15 years or older and worth 15000 or more at end of tax yr

Question 11

What is the fuel benefit?

Answer 11

25300

Question 12

What is exempt in respect of electric cars?

Answer 12

workplace charging point or point installed in EE’s home

Question 13

When is living accomodation job related?

Answer 13

Necessary
For better performance of job and customary
provided due to threat of security

Question 14

Accomodation benefit when rent paid by ER?

Answer 14

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

Question 15

Expensive property charge?

Answer 15

cost (plus improvements before start of ty)-75000 x ORI at start of year

Question 16

When is MV used in accomodation expensive property formula?

Answer 16

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!!!

Question 17

Household expenses if in job related accomodation?

Answer 17

Benefit from these is limited to 10% of other earnings from the employment. Council tax and water charges are exempt.

Question 18

What does the 10,000 loan rule apply to?

Answer 18

Aggregate of all loans to that EE.

Question 19

Interest on qualifying loans if loan given by ER?

Answer 19

Is ignored because the benefit and the amount qualifying for tax relief would net off.

Question 20

Interest on qualifying loan given by ER if only PARTIALLY used for qualifying purposes?

Answer 20

The full amount of cheap interest is a benefit and then the qualifying aspect is deducted on a tax comp

Question 21

Do the loan rules just apply to loans by ER’s?

Answer 21

No bc all included parent co, subs and future er

Question 22

What happens when a loan is written off?

Answer 22

Treated as earnings (not of ee dies)

Question 23

Use of asset rule

Answer 23

Higher of:
-rents paid by ER
-20% x mv when first available

Question 24

Can use of asset rules take into account when it is available to more than one EE?

Answer 24

Yes (on a just and reasonable basis)

Question 25

Assets transferred?

Answer 25

Higher of:
-MV when given
-OG MV less amounts already charged to tax

Question 26

Asset transferred rules for cars and houses?

Answer 26

MV less any amounts paid by EE’s

Question 27

If a computer is used partially for business and partially for personal?

Answer 27

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)

Question 28

Are 0 emission vans exempt?

Answer 28

Yes

Question 29

What is the van and fuel benefit?

Answer 29

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).

Question 30

Phone exemption rule?

Answer 30

One phone, in the employers name (NOT to a family meber).

Question 31

What are mileage reimbursements for?

Answer 31

Business mileage in EE’s own car APART from passenger payments which also apply to company owned vehicles (5p pp)

Question 32

Provision by ER of creche or nursery

Answer 32

Exempt

Question 33

When did the childcare scheme finish?

Answer 33

4 oct 2018

Question 34

Childcare scheme BEFORE 6 april 2011?

Answer 34

55PW for everyone

Question 35

Childcare scheme ON AND AFTER 6 april 2011?

Answer 35

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).

Question 36

What are the limits for incidental expenses for working away from home?

Answer 36

5 in UK, 10 abroad

Question 37

additional costs of WFH under homeworking arrangement

Answer 37

exempt

Question 38

first 500 of pensions advice per tx yr

Answer 38

exempt

Question 39

For staff canteens to be exempt they must be…

Answer 39

open to all employees

Question 40

staff suggestion scheme awards

Answer 40

exempt up to 5000

Question 41

long service awards?

Answer 41

exempt up to £50 per year of service, as long as have been working there 20 years

Question 42

trivial benefit threshold for directors of close companies

Answer 42

£300

Question 43

What are type A optional remuneration agreements?

Answer 43

EE gives up salary for a non cash benefit

Question 44

What are type B optional remuneration agreements?

Answer 44

EE chooses to receive benefit rather than salary (think barb)

Question 45

what happens when salary is sacrificed for exempt benefits?

Answer 45

Taxed on the amount given up

Question 46

What is exempt from OPRA rules?

Answer 46

cars with co2 emissions <75g, pensions advice up to £500, cycle schemes, er provided childcare, pensions, trivial benefits, subsidized canteens.

Question 47

What is the tax award scheme?

Answer 47

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.

Question 48

What does a deduction under s336 mean?

Answer 48

-employee OBLIGED to incur the expense as holder of the employment
-amount incurred wholly, exclusively and necessarily in the performance of duties.

Question 49

what is deductible under S337?

Answer 49

travel expenses- e.g to temp workplace. NOT ordinary commuting

Question 50

when can a client entertaining deduction be claimed?

Answer 50

-has been disallowed in the ERs tax comp
-ee has physically received that amount via reimbursement or a SPECIFIC round sum

Question 51

Things to consider when thinking if something is a permanent or temporary workplace?

Answer 51

-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)

Question 52

what is included in s337 as costs of travel?

Answer 52

accomodation and food

Question 53

what are the learnings from Brown and Bullock case law?

Answer 53

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.

Question 54

what type of charitable donation is deducted when coming to net income?

Answer 54

payroll giving scheme/deduction scheme/GAYE scheme

Question 55

are insurance indemnity policies tax deductible?

Answer 55

yes (assume only if necessary for the profession)

Question 56

When are reimbursements exempt from tax?

Answer 56

If the employee would be able to get a deduction for then when doing their tax return.

Question 57

how does it work with round sum allowances?

Answer 57

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)

Question 58

smith v abbott

Answer 58

journalist buying newspapers- wasnt deductible as not for the performance of duties but to qualify him to perform those duties

Question 59

hillyer v leeke

Answer 59

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!!)

Question 60

humbles v brookes

Answer 60

history teacher claimed a deduction for the cost of attending weekend lectures to improve his knowledge-not allowable.

Question 61

Medical insurance for when need for treatment arises while abroad?

Answer 61

Exempt (think david yarrow!)

Question 62

scholarship awards when paid to directors children?

Answer 62

taxable

Question 63

When is an ‘advance’ exempt?

Answer 63

If below 1,000, spent within 6 months and employee accounts to er at regular intervals for advnace obtained.

Question 64

loans by banks to ee’s at normal commercial rates

Answer 64

not taxable benefit