Taxable benefit

lgarside

Hello is anyone able to help me with regard to this issue.
If a company agrees to pay an employee say 2500 for travelling expenses before their salary is taxed does this then become a taxable benefit. Or can a company pay an employee traveliing expenses before tax as a rather than as a company having to pay them an additional 2500 in salary??

claudialowe

A company can reimburse an employee travel expenses at 40p per mile for the first 10,000 miles and the 25p per mile, and then there is no "perceived benefit" to the employee. This is totally separate from any salary/NI issues.

If the company then wants to claim back the VAT on the fuel, then the employee must submit valid fuel receipts equal to the amount being claimed.

Hope this helps.

Claudia

deanshepherd

You can't just make an agreement to pay x amount as a flat rate travel allowance and x amount as salary. It will all be treated as salary, taxed and NIC'd.

claudialowe

Sorry - I misunderstood the question :blushing: Must mean that it is January!

I took it to mean separating out salary and travel expenses, so that only the salary was taxed and NI'd.

Claudia

deanshepherd

I agree with everything you said Claudia, I just wanted to make the point about what would happen if the employer said "We will pay you £30k salary and £2.5k to cover your travel expenses".

lgarside

taxable benefit

Thanks for the answers!! If a company was to pay the train ticket say for 2500 on your behalf becuase your job required you to travel 40 mins on a train each day would this be a taxable benefit??

Your help is really appreciated.

claudialowe

If it was just like that, then yes, it would be a taxable benefit.

However, from memory, what I think is that a company can give employees an interest free loan for less than £3,000, without it being a taxable benefit.

I am happy though to be proved wrong on this - these certainly were the rules about ummmm errrrrr 20 years ago when I worked in London :blushing:

Claudia

deanshepherd

If your employer buys you a season ticket then that is reportable on the P11D as a taxable benefit, assuming it is used for ordinary commuting.

If your employer lends you the money to buy your own ticket and you repay that loan during the year then there is no taxable benefit, unless your loan exceeds £5k.

If your employer gives you an extra £2.5k pay and says go buy your season ticket out of that then that is immediately taxable as additional salary via the payroll.


Incidentally, my last employer had agreed a dispensation with the local tax office that they need only report 50% of the cost of the season ticket for their professional staff on the P11D because it was partly used for travel to and from clients during the day! The dispensation dated back about 10 years and I am sure if the Revenue ever remember it will swiftly be repealed!!

lgarside

taxable benefit

Thanks Dean that helps a lot. I guess there is no way round it then the Inland revenue get you all ways round!!!!!

Dean

Can I just pick up on one small comment here:

lgarside wrote: »

becuase your job required you to travel 40 mins on a train each day

If this was written into the contract of employment and distinguished separately from remuneration (salary) couldn't this then be paid as a tax free benefit?

Regards

Dean

deanshepherd

Provided that was not a commute to and from home then that would be fine. Unless of course the same season ticket was also used to travel to and from home.

Poodle

deanshepherd wrote: »

Provided that was not a commute to and from home then that would be fine. Unless of course the same season ticket was also used to travel to and from home.

Just another thought.

If this is to a temporary work placement then this may fall under the 24 month rule and qualify for relief?Here (did it:thumbup:). Page 12.

Poodle