Taxable benefits

kazflan Registered Posts: 36 Regular contributor ⭐
We are looking to employ on the following basis
Employees place of work would be at our office for three days a week. the latter part of the week he will travel to the London office and work from there or could travel home and work from home.
As he commutes quite a distance we will be paying for his hotel accomodation and breakfast only for three nights.
The company will suffer the tax and NI.
If he pays personally and submits a claim would it be better to gross up and pay through payroll? (I need to be sure he is not out of pocket)
Or pay on the company credit card, again I guess I would have to put it through the payroll to account for the tax and NI??
Possibly each Wednesday he will travel from base to the London office, is this a taxable benefit or business expense.
We have differing views here and would like another opinion.


  • payrollpro
    payrollpro Registered Posts: 427 Dedicated contributor 🦉

    I feel the criteria in Booklet 490 is fairly clear on this issue. With 60% of his time in one place the main office is obviously his place of work and hence the cost of all his travelling, etc, is commuting and personal. Therefore any payment made by the emloyer towards this cost has to be a benefit in kind.

    However, given that he has (I assume it is has and not wants) to stay over night when he does this three day stint it suggests that his normal place of work is a might inconvenient and hence I wonder if you could claim that his home is his normal place of work because the normal one is not within a reasonable commuting distance.

    This would have to be legitimised by proper attention to detail but it is worth considering.

    Assuming you leave it unchanged then yes all costs incurred in transporting him to the normal place of work and his accommodation and subsistence costs will be reportable and chargeable. I cannot see how a PSA might operate because it is not minor, nor is it irregular nor is it difficult to operate PAYE so that leaves grossing up in payroll as far as I can see.

    The company credit card is not relevant because it is merely another way of paying for it all, it does not change the overall nature of the transactions.

    The journeys to the London office are clearly business as they are his alternative place of work but you need to read up on the 40% and 24 month rules to be certain that it cannot be caught as his second, normal place of work. As soon as it becomes the usual pattern or as soon as you know it is going to a fairly permanent arrangement then this journey too becomes commuting.

    Difficult one but I am struggling to see how you can classify this in a way which satisfies all sides. As I said, 490 is the place and I am sure one of the scenarios in there is very similar to this.

  • kazflan
    kazflan Registered Posts: 36 Regular contributor ⭐
    Thankyou for that and I will look at 490. I have not had to gross up pay before as we have always used a bureau, any advice on how to do it ? I have not tackled it yet and assume it is not as straight forward as I imagine.
  • kazflan
    kazflan Registered Posts: 36 Regular contributor ⭐
    I am not sure if I am mis reading, but do I have to report the payment of the above expense on the P11d, even though the company is covering the tax & NI and making the payment through the payroll?? Confused!!
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