Employment Income - Lecture 3 Flashcards
If individual regarded as employed..
Assessable to tax on employment income
If individual regarded as self-employed..
Assessable to tax on trading income
Benefits assessable can be taxed two ways
1) Adjustment to employee’s tax code for tax calculation purposes
2) Adding taxable value benefit to salary for employee and taxing via PAYE
Assessable benefits - benefit valuation =
Marginal costs to employer providing benefit
If employee pays employer for benefit
Assessable amount calculated as normal and reduced by employees’ contribution (max £5000)
Car benefit =
List price (when new) x CO2 %
CO2 emissions rounded
Down to nearest 5g/km
No additional ‘running cost’ benefit unless (2)
- Chauffeur provided (benefit = cost to company)
- Private fuel paid by company
Fuel benefit =
£22,600 x CO2 % x time used
Contributions towards fuel benefit by employee
No deduction
Beneficial loan
Interest free/ low interest loan made to employee by employer
Capital amount > average method
((Opening balance + Closing balance) / 2) x ORIT
Capital amount > alternative (precise) method
Actual capital x ORIT x n/12
If total amount doesn’t exceed £10,000 (beneficial loan)
No assessable benefit
Beneficial loan > exceeds £10,000
Full loan chargeable, not just excess over £10,000
Use/ gift assets =
20% x open market value when made available
Gift of asset when new, benefit valuation =
Cost to company
Use of asset followed by gift, benefit valuation higher of
- Market value at date gift less amounts paid by employee
- Cost to employer less benefits assessed to date and amounts paid by employee
Accommodation if job related
Exempt
Accommodation if non-job related, benefit valuation =
Basic charge + Further charge + Accommodation living expenses + Use of furniture
Basic charge > accommodation
Higher of annual value/ rent paid by employer
Further charge > accommodation if property > £75,000
(Cost / valuation [6 year rule] - £75,000) x ORIT
Motorbike expenses
24p per mile regardless mileage
Bicycles expenses
20p per mile regardless mileage
Class 1 Primary
Paid by employee > based cash remunerations
Class 1 Secondary
Paid by employer > based cash remunerations of employee
Class 1a
Paid by employer > based on employment non-cash benefit valuations
