Certain socialsecurity benefits, including the state retirement pension, statutory sick pay, maternity pay and paternity pay
Benefits in kind
Benefits which are not taxable continued:
"Green commuting" benefits
Contribution to home expenses if working from home £6 perweek
Approved mileage
Removal expenses up to £8,000 per year
Benefits which are not taxable continued:
Award under £5000
Non- cash long serving award
Employer's contributions to a registered pension scheme
Some expenses can be offset against employment income thereby reducing the taxable income from that source.
Wholly, exclusively and necessarily incurred in the performance of the duties of the Employment
BENEFITS IN KIND
Season tickets (for travel, sport games etc)
School fees paid by the employer
Beneficial loans provided by the employer
Private health insurance
Living accommodation
BENEFITS IN KIND
Ancillary services connected with living accommodation
Assets loaned for private use
Cars and fuel provided for private use
Vans provided for private use
Living accommodation
Basic taxable benefit for employee
is higher of:
annualvalue - what the employer
could earn if would rent this property
on the market.
annualrent - if employer rents it from
another company and provide to an employee.
Living accommodation
The taxable benefit is reduced by any contribution made by the employee.
Expensive living accommodation
Additional taxable benefit for employee if the property cost more than £75,000, calculated as:
(£cost of the property - £75,000) x 2.25
cost of a property is equal to its purchase price, plus the cost of any improvements made before the start of the tax year, less any capital contribution made by the employee.
If the house was owned by the employer for more than 6 years before occupation by the employee, market value at occupation may be substituted for cost.
No taxable benefit arises in relation to "job-related" living accommodation provided for an employee.
Job-related accommodation
necessary for the proper performance of the duties of the employment
provided for the better performance of duties and this is customary
provided for security reasons
An employee who is provided with living accommodation is also taxed on the cost to the employer of providing any "ancillary services" such as heating, lighting, cleaning etc.
If the accommodation is job-related, the taxable benefit in relation to ancillary services cannot exceed 10% of the employee’s net earnings.
The employee is taxed annually on 20% of the market value of the asset on the date of the loan
If the asset is subsequently given or sold to the employee, he or she is taxed on the higher of:
the market value of the asset at the date of transfer, less any amount paid for the asset by the employee
A "beneficial loan" is one which is granted by an employer to an employee (above £10,000) either interest-free or at a rate of interest which is below the official rate of interest.
How we calculate benefit in kind?
amount of loan x ( 2.25% - the rate of loan) = B-I-K
If the amount of a beneficial loan varies during the tax year, there are two methods of calculating interest for the year at the official rate:
Normal method:
The amounts of the loan at the start and at the end of the tax year are averaged and multiplied by the average official rate for the year
Price of a new car (including additional accessories)
x
Applicable percentage based on CO2 emission
Price of a new car is reduced by capital contribution made by the employee up to a maximum of £5,000
There is an additional 4% supplement for diesel cars, which do not meet the Real Driving Emissions 2 (RDE2) standard. The first such cars are now coming on to the market. Company diesel cars meeting the RDE2 standard are treated as if they were petrol cars.
The maximum taxable benefit in all cases is 37% of list price.
If the car is not made available for the whole tax year, or is off the road for 30+ consecutive days, the benefit is reduced proportionately
Any amount paid by the employee towards running costs (apart from fuel) reduces the taxable benefit, not the car price
Fuel provided to an employee for private use gives rise to a further taxable benefit in kind
£27,800 x Applicable percentage
If a motor van is made available for an employee’s private use, there is a taxable benefit in 2023/24 of £3,960
Where any private fuel is provided there is an additional taxable benefit of £757
These charges are reduced proportionately if the van is not provided to the employee for the whole of the tax year
Taxpayers are assessed upon income payments arising from employment.
Such monies can be monetary or non-monetary rewards to employees.
Expenses are allowed against income if they are wholly, exclusively and necessarily incurred in the performance of the duties of the office or employment