Employment Income

Question 1

What is Employment Income?

Answer 1

• Wages/Salaries/Bonus/Tips
• Pension – pension contributions are deductible.
• Benefits provided by employer (taxable or exempt)
• Expense allowances/Reimbursed expenses

Question 2

What are Considered as Taxable Benefits?

Answer 2

• Vouchers
• Living accommodation and associated expenses
• Car/van, Fuel, and Assets provided by employers for private use

Question 3

What are the General Rules Regarding Taxable/Exempt Benefits?

Answer 3

Time-apportion benefits if not provided for full tax year.
Deduct employee’s contribution (except private petrol).

Question 4

What Taxable/Exempt Benefits are the for Vouchers?

Answer 4

Has to be provided by employer.
Taxable benefits of a cash voucher = cash equivalent.
Taxable benefit of a non-cash voucher = cost to employer.

Question 5

What Taxable/Exempt Benefits are the for Accommodation?

Answer 5

Job accommodation exempt if necessary for proper performance of duties, customary and ensures better performance of duties, or is provided for security reasons.

Question 6

How to Calculate Taxable Benefit Value of Accommodation?

Answer 6

Taxable benefit value = Basic Rental Charge + Additional Charge – Employee’s own payments.

• Basic rental charge – higher of annual rateable value or annual rent.
• Additional Charge – property costs > £75k, (cost (Market Value if “old property” acquired >6yrs) + capital improvements by employer - £75k) x official rate of interest (ORI) (2.25% in 23/24)
• Employees’ own payments – rents paid by employee is deductible. Time apportions by months.

Question 7

What Taxable/Exempt Benefits are the for Company Car for Private Use?

Answer 7

Car benefits = list price of car x CO2 %
Time apportion & deduct employee contributions.
Capital contribution deducted from list price before benefit is calculated.
Accessories included in list price only if >£100.

Question 8

How to find the CO2 % when Working Out the Taxable Car Benefit:

Answer 8

16% + ((Co2 emission -55)/5)%
20% + … if diesel car doesn’t meet RDE2.
Round down CO2 emissions to nearest multiple of 5.

Question 9

What Taxable/Exempt Benefits are the for Company Fuel for Private Use?

Answer 9

Fuel Benefit per year = Basic figure x CO2%
Fuel Benefit – time apportion if part way through year, no deduction of employee contribution.
Basic figure - £27,800 for 23/24

Question 10

What Taxable/Exempt Benefits are the for Company Van for Private Use?

Answer 10

Van benefit per year = £3,960.
£0 benefit is zero emissions, time apportion, reduce by employees contributions.

Van Fuel Benefit per year - £757.
Time apportion, not reduced by employees contribution.