PT20 Miscellaneous Benefits Flashcards
Are vans a taxable benefit?
There is no taxable benefit for zero emission vans.
The benefit for providing a van with CO2 emissions to an employee with unrestricted private use is £3,600 per year.
In addition, there is a benefit of £688 where an employer provides free or subsidised fuel for
private use. There is no van or fuel benefit if private use is insignificant or if the restricted private use condition is met.
Vouchers?
Yes, if an employee is given vouchers, the cost of providing these is taxable as a benefit.
Mileage allowances?
If the employer reimburses the employee for business mileage incurred using his own car, the amount reimbursed must be compared with the tax-exempt limits set by HMRC.
If the amount reimbursed exceeds the limits this excess is taxable. If it is less than the limits, the shortfall is deductible.
Employer-supported childcare schemes closed to new entrants from….
existing members will continue to receive the following benefits:
4 October 2018
Where an employee joined an employer-supported childcare scheme on or after 6 April 2011, an exemption is available as follows:
Basic rate taxpayers First £55 pw
Higher rate taxpayers First £28 pw
Additional rate taxpayers First £25 pw
The rate of tax payable is determined using the employee’s estimated earnings from the employment only. A basic earnings assessment is carried out by the employer at the start
of the tax year.
Where an employee joined a scheme before 6 April 2011, the exemption is £55 pw for all taxpayers.
Name 13 exempt benefits
- Employer contributions to a registered pension scheme.
- Mobile phones (only one per employee).
- Removal expenses up to £8,000 (excess and non-qualifying costs are taxable).
- Exclusive nursery.
- Car parking at or near the place of work.
- Staff canteens, provided they are available to all employees.
- Incidental expenses for working away from home (£5 in UK, £10 if abroad; tax in full where limits exceeded).
- Training costs.
- Christmas party or other annual functions costing not more than £150 per head.
- Staff suggestion scheme awards up to £5,000.
- Long service awards up to £50 per year of service if served at least 20 years.
- Additional costs of working from home under a homeworking arrangement.
- First £500 of pensions advice per tax year
There is a statutory exemption for trivial benefits. How much is a trivial benefit?
And what are the other rules?
The cost of providing the benefit cannot exceed £50
it cannot be provided in recognition of particular services carried out by the employee.
There is no limit on the amount of trivial benefits that can be provided, except for directors of close companies, where a £300 annual cap applies.
What are the optional remuneration arrangement rules?
Where a benefit is provided to an employee under an ‘optional remuneration arrangement’ (OpRA) the actual amount taxed in respect of the provision of the benefit will be the higher of:
the cash amount that the employee would have received or the taxable benefit amount determined under the benefit rules (before taking account of employee contributions).
An OpRA is where the employee gives up a right to receive salary in return for a benefit or where the employee chooses to receive a benefit rather than an amount of salary.
What do the optional remuneration arrangements not apply to?
- the provision of pensions advice qualifying for exemption,
- provision of cycles and cyclist safety equipment,
- tax-free employer-provided childcare,
- contributions to registered pension schemes
- cars with low CO2 emissions (not exceeding 75g/km).
Under a PAYE Settlement Agreement (PSA), an employer settles the employee’s tax liability in respect of an expense or benefit. An expense or benefit can be included in a PSA if it is:
- minor;
- paid on an irregular basis; or
- given in circumstances where it is impractical to apply PAYE or apportion the value of particular benefits which have been shared by a number of employees.
Amounts included in a PSA do not have to be reported on form P11D and are not taxable on the employee.
Under a PAYE Settlement Agreement (PSA), how do you find the tax payable?
A grossing-up exercise must be done to find the tax payable:
* For basic rate taxpayers, the benefit is multiplied by 20/80 to find the tax payable.
* For higher rate taxpayers, the benefit is multiplied by 40/60 to find the tax payable.
* For additional rate taxpayers, the benefit is multiplied by 45/55 to find the tax payable.
A PSA is an enduring agreement which does not need to be renewed.
What’s a taxed award scheme?
Under a Taxed Award Scheme (TAS), the provider of an incentive award accounts to HMRC for the tax due on the award at 20% or 40% on a grossed-up basis.
The employee is taxable on the award and must report the grossed-up value on their tax return. They are entitled to a credit for the tax paid.
