Employment Income Flashcards
What does employment income include?
Income arising from employment, income of an office holder (e.g. Director) and any incidental benefits obtained by an employer (e.g. bonus).
When will employment income be taxed?
Receipt basis - the actual amounts received in the tax year.
What are the 2 general rules when it comes to taxable benefits?
1 - Time apportion (monthly basis for exam) if not available for full year.
2 - Deduct contributions made by the employee from the taxable benefit.
What makes accommodation ‘job related’
- Necessary for the proper performance of the employee’s duties.
- Better performance of the employee’s duties and is of a kind in which it’s customary for it to be provided.
- Security reasons.
What is the basic rental benefit?
The higher of:
1. The annual value
2. Any rent paid by the employer
When is a property classed as expensive?
If the original cost to the employer was more than £75k
What is the market value rule?
(Cost-£75k) x official rate of interest at the start of the tax year (2%)
Cost = Original Cost +improvements made before the start of the tax year
What is a taxable benefit?
(The cost to the employer - any employee contribution)
What is the taxable benefit provision when it comes to cars and fuel?
Only available to private use by the employee (includes commuting)
What is the basis of the charge on Cars?
CO2% x List Price = Taxable Benefit
% - For CO2 > 75g/km: CO2 - 75/5 = X (round down) + 20% (+4% for Diesels that don’t meet local standards) (-1% after 2020) Max = 37%
List price - deduct capital contributions of up to £5k
What is the basis of the charge on Fuel?
Fuel benefit - an additional benefit will apply where the employer pays for fuel used during private journeys.
%(same as car benefit) x £27,800 = Taxable benefit
How are Vans used privately taxed?
No benefit if only used for commuting.
Benefit is an annual amount of £3,960 (look in tables)
Separate charge for fuel used for private use, annual benefit is £757.
How are assets available for private use taxed?
Higher of:
20% x MV when first provided
Rent paid by employer
If there is significant private use, calculate the benefit in full then apportion for non-business use.
What is the general rule towards other benefits?
Cost to employer = benefit
What benefits are exempt?
Contributions by an employer to a registered pension scheme
Pension advice up to £500 per tax year
Workplace nurseries
One mobile phone
Computer (private use irrelevant)
Free/subsidised meals in a canteen
Annual social events up to £150
Third party entertainment
Non-cash gifts from third parties up to £250 per tax year
Provision of parking space
Staff awards up to £5k
Medical treatment for return to work up to £500
Non private health screening/eye test
Relocation £8k
