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
Net earnings
All employment earnings - allowable deductions from general earnings, statutory mileage and occupational pension scheme contribtuions
Cars for private use - charge basis
List price + optional accessories originally provided + further accessories costing more than £100
Maximum capital contribution by employee toward car
£5000
Private fuel benefit where employee makes partial contribution
No reduction in benefit
Average method for employment related loan
Average of balance at start and end of tax year
Strict method for employment related loan
interest on monthly basis, election made by taxpayer
benefit charge - Asset for private use
Higher of the annual value or any rent or hire charge payable by employer
Annual value of asset for private use
20% MV when first provided for private use
Assets transferred to employee - taxable benefit
greater of
Current market value
MV when first provided - amounts already taxed under private use rule
Exempt/not-exempt benefit included in optional remuneration arrangement
Pension savings
Exempt
Exempt/not-exempt benefit included in optional remuneration arrangement
Employer provided pension advice
Exempt
Exempt/not-exempt benefit included in optional remuneration arrangement
Childcare provision
Exempt
Exempt/not-exempt benefit included in optional remuneration arrangement
Cycle to work (Cycle + Safety equip)
Exempt
Exempt/not-exempt benefit included in optional remuneration arrangement
Ultra low emission cars (< 75g/km)
Exempt
Exempt/not-exempt benefit
Employer contribution to registered pension scheme
Exempt
Exempt/not-exempt benefit
Trivial benefit (<£50 to provide, not cash / cash voucher and for non-work reason, annual cap £300 when provided to certain directors)
Exempt
Exempt/not-exempt benefit
pension and financial advice available to all employees <500 pa
Exempt
Exempt/not-exempt benefit
Counselling and outplacement services and retaining course on termination
exempt
Exempt/not-exempt benefit
Childcare facilities run by or on behalf of employer
Exempt
Exempt/not-exempt benefit
One mobile phone available for private use
Exempt
Exempt/not-exempt benefit
Free or subsidised meals available to all staff
Exempt
does not apply when employee has contractual entitlement to canteen meals instead of cash salary (salary sacrifice)
Exempt/not-exempt benefit
Loans < 10k annum
Exempt
Exempt/not-exempt benefit
Social event up to £150 per annum
Exempt
Exempt/not-exempt benefit
Entertaining provided by third party
Exempt
Exempt/not-exempt benefit
Non-cash gift from third parties up to £250 pa from same donor
Exempt
Exempt/not-exempt benefit
Provision of parking space at or near place of work
Exempt
Exempt/not-exempt benefit
Up to 5k fr. staff suggestion scheme
Exempt
Exempt/not-exempt benefit
Work related training courses
Exempt
Exempt/not-exempt benefit
Sports and recreation facilities available to employees not general public
Exempt
Exempt/not-exempt benefit
Payment towards additional costs of employee wfh
Exempt up to £6 / week no evidence, more need evidence
Exempt/not-exempt benefit
Personal incidental expenses when away overnight on business
Exempt
£5 UK
£10 abroad
Exempt/not-exempt benefit
Overseas medical treatment and insurance when working abroad
Exempt
Exempt/not-exempt benefit
Payment of travel expenses if public transport disrupted, late night journeys, car sharing break down
Exempt
Exempt/not-exempt benefit
Bicycles / safety equipment available to all employees
Exempt
Exempt/not-exempt benefit
Works buses and subsidies to public bus services
Exempt
Exempt/not-exempt benefit
Provision of vehicle battery charging at or near work place for employee who uses vehicle if available generally
Exempt
Exempt/not-exempt benefit
Reimbursement for own vehicle use for business under statutory mielage
Exempt
Exempt/not-exempt benefit
Reasonable removal expenses paid for by employer for new employment or relocation
Exempt up to 8k
Exempt/not-exempt benefit
Non cash long service awards at least 20y services less than £50 per year
Exempt
Exempt/not-exempt benefit
Cost of eye tests and prescription glasses if use visual display unit equipment
Exempt
Exempt/not-exempt benefit
Health screening assessment/checkup provided for employee by employer
Exempt
Exempt/not-exempt benefit
Cost of officially recommended treatment to help return to work after absence due to ill health or injruy
Exdempt
