Employment Income Flashcards
What does employment income include?
Salary
Bonuses
Commissions
Expense allowances
Tips
When are the earnings assessed?
The earlier of:
Payment made
When they became entitled to payment
What benefits are taxable?
Vouchers
Living accommodation
Expenses
Cars and fuel
Vans
Assets for private use
What are the 2 general rules of benefits?
Time apportions - x/12
Deduct employee contributions
When is living accommodation not taxable?
Job related:
For proper performance (caretaker)
For better performance (firefighter)
For security (gov official)
What can a director claim in exemptions?
Only 1 of first 2 if they own <5% of shares or full-time director or non-profit
What are the 2 potential benefits of living accommodation?
Basic rental benefit
Additional yearly benefit of property > 75,000
What is basic rental benefit?
The higher of:
The annual rateable value
Rent paid by employer
How is the additional yearly benefit of property > £75,000 calculated?
Cost = original cost + improvements before tax year
(Cost - 75,000)x interest rate
Deduct employee contribution
Use market value if property over 6 yrs old
What is/isn’t taxable for cars?
Taxable when used for private use (home-to-work travel
‘Pool’ cars not taxable
What is the taxable benefit for cars?
List price x [(CO2(rounded down)-75)/5 + 20 + 4 for diesel]
Maximum % is 37
Include accessories beforehand
Ignore discounts
What is the taxable benefit for fuel?
same as car % x 27,800
No reduction if partial contribution
What is the taxable benefit for vans and their fuel?
£3960 unless zero emissions £0
£757 fuel
What is the taxable benefit of assets available for private use?
The higher of:
20% x market value when 1st provided
Rent paid by employer
No taxable benefit if private use is not significant
What is the taxable benefit of other benefits?
Cost to employer - employee contribution
For in-house benefits, cost is marginal cost
What benefits are exempt form tax?
Employer pension contributions
Trivial benefit <£50
Pension advice/financial planning
Childcare on behalf of employer
Mobile phone
Free meals
Social events up to £150 annually
3rd party entertainment
Non-cash gifts up to £250
Provision of parking space
Training courses
Sports facilities
Working from home costs
Travel expenses
Removal expenses £8000 for relocation
Health stuff
Vehicle charging
When must PAYE be paid to HMRC?
17 days after ‘tax month’
22nd of month
Quarterly if total < £1500
How are PAYE codes calculated?
Personal allowance + allowable expenses + adjustment for overpaid tax - taxable benefits - adjustment for underpaid tax
How are positive PAYE codes calculated?
Remove last digit
Add letter to end: L normal, N transferred PA, M received PA
How are negative PAYE codes calculated?
Remove last digit
Minus 1
Put K at beginning
