Taxable Benefits Flashcards
What is the general rule for employee expenses to be tax deductibles?
The amount must be incurred wholly, exclusively and necessarily in the performance of the duties of the employment.
When are travel expenses deductible?
When an employee travels to somewhere that is not their usual place of work.
How do entertaining expenses operate?
Allowance:
- If an employee is given an allowance for entertaining, the allowance is included in general earnings and the actual expenditure is deducted.
Salary increase:
- The entire amount is taxed and the employee cannot deduct any entertaining expenditure. The employer can deduct this entire amount from its own tax computation
How are vouchers taxed?
Taxable amount = Cost to employer - amount paid by employee
Living Accomodation
Annual Rental Value/Rent Paid
OR
(Cost-75000)*annual interest rate
Cost replaced by MV when provided to employee if more than 6 years after purchase
Living expenses
Taxable on cost to employer less amount paid by employee
Limited to 10% of employee’s net earnings (earnings-allowable deductions and excluding benefits)
Vans and fuel for private use
Flat rate benefit: £3,960 for private use
Zero emission van benefit: £0
Fuel benefit: £757 no reduced by employee contributions
Assets for private use
20% of MV when first supplied
Provision of furniture
20% of MV when first provided for use
Contributions to a pension scheme
Tax free
What constitutes a trivial tax free benefit?
- Costs less than £50
- Not cash or vouchers
- Provided for non work reasons
- Annual cap of £300 for certain directors
Pension advice over for £300
- Pension advice is tax free up to £500
Private childcare facilities
- Childcare facilities are only tax free if provided by employers
Are phones a tax free benefit?
- Only one mobile phone is available for private use
Up to what amount are loans tax free?
- Total loans cannot exceed £10,000 outstanding per tax year
How much of social events are tax free?
- Up to £150 per head per tax year
- If one event costs more than £150 the total cost of the event is taxable
- If multiple events total more than £150, only amounts exceeding £150 are taxable
Entertainment provided by a third party
- Tax free
Non cash gifts from third parties
- Tax free up to £250 from the same donor
Provision of a parking space at or near the employee’s place of work
Tax free
Staff suggestion scheme rewards
- Tax free up to £5000
When are sports and recreation facilities tax free?
Only if the facilities are employee only
How much are work-from-home payments tax free?
Up to £6 per week without supporting evidence
- Payments in excess require documentary evidence
How much allowance is there for personal incidental expenses for business trips?
- £5 in the UK
- £10 abroad
Are overseas medical treatment and insurance taxable?
Only when the employee is working abroad
When are travel expenses tax free?
When public transport is disrupted, there are late night journeys or car sharing arrangements break down
When are bicycles tax free?
When made available to all employees
How much of business mileage is tax free?
- 45p for first 10,000 miles, 25p thereafter
What is the tax free limit for relocation expenses?
8,000
What is the limit for a tax free gift?
There has to be at least 20 years of service, not exceeding £50 per year of service
Are eye tests/prescription glasses taxable?
No if employees must use computers
How many health screenings are tax free per year?
One
Medical Insurance
The cost of providing is a taxable benefit
