15 Brilliant Tax Free Benefits in Kind

Tax Free Bags Represent Duty Exempt Discounts

It’s P11D time, but have you considered giving your employees benefits in kind that are tax free, here are some to choose from:

  1. Pensions – Up to £40k can be paid in to you pension schemem by your employer (2014/15)  and you can use carry forward to pay in even more
  2. Childcare – Up to £55 per week but check the rules to makesure your childcare complies (HMRC Leaflet IR115)
  3. Mobile Phone – One per employee
  4. Lunch – Tax Free Lunch Blog
  5. Cycle Schemes – Cycle to Work Blog
  6. Fitness – Fitness Blog
  7. Parties and Gifts – Christmas Blog
  8. Parking – Parking Blog
  9. Business Mileage Allowance – 45p for the first 10,000 miles then 25p
  10. Long Service Award – A bit restrictive as you need 20 years service, the tax free amount is £50 x the number of years
  11. Eye Tests and Spectacles – The Eye Test must be needed under the Health & Safety at Work Act
  12. Suggestion Schemes – Suggestion Scheme Blog
  13. Insurance such and Death in Service and Income Protection – Medical Insurance Blog
  14. Travel Expenses – Travel Blog
  15. Working From Home – Working from Home Blog

steve@bicknells.net

Self Employed Claimable Motor Expenses

mann im auto

If you are self employed, you probably use your car for your business and that means you will incurr costs to keep the car running.

So what is a car….

A car for tax purposes is any motor vehicle of a kind normally used on public roads which has three or more wheels and either:

  • is constructed or adapted mainly for carrying passengers or
  • has to the rear of driver’s seat roofed accommodation which is fitted with side windows or which is constructed or adapted for the fitting of side windows

If you had a commercial vehicle instead of a car its likely that all the costs would be business costs because there would only be minimal incidental private use.

HMRC have just released a video to explain how you can claim motor expenses….

Bascially you can claim either a % of the total running costs (Actual Cost Method) or a mileage allowance payment.

The mileage allowance is 45p for the first 10,000 miles and then 25p per mile after that.

Using the Actual Cost Method you can claim a % (relating to business use) of :

  • Capital Allowances (these help you recover tax on the purchase price of the vehicle)
  • Fuel
  • Road Tax
  • Maintenance
  • Insurance
  • MOT
  • Repairs

You may have other costs which are ‘wholly and exclusively’ for business such as:

  • A Sat Nav to find customers and make deliveries
  • Signage on the vehicle
  • Modifications

Basically if a cost is ‘wholly and exclusively’ for business then you can claim 100% against tax.

steve@bicknells.net

Do you get tax free parking?

Pool Cars

If you work in town or city  parking costs can be high.

So if your employer gives you a parking space its a big help.

There is a tax exemption (tax and NI) for parking facilities that are within a reasonable distance of where you work and its not restricted to on-site parking.

The parking space can also be used in the evenings and weekends and isn’t restricted to the nearest car park.

You can also use Salary Sacrifice.

See EIM 21685 for further details

So yes its tax free, so why is there any confusion?

Well a few years ago (2009), we had stories like….

Commuters who drive to work face a new ‘parking tax’ of up to £350 a year.

Ministers are backing a ‘workforce parking levy’ which will come into force in Nottingham in 2012 – and is likely to be adopted across the country.

The pilot scheme will see firms with more than ten parking places for staff charged £250 a year for each, rising to £350 in two years.

Employers would be free to pass on the charge to their staff – meaning it would effectively be a tax on driving to work.

This meant that there was some confusion, but its all clear now and free parking is an excellent tax free employee benefit.
steve@bicknells.net

Can I have a Tax Free Lunch?

Business People Having Meal Together

Let’s look at the options….

Exemption for Canteen Meals

Employees can be provided with free or subsidised meals provided generally to employees served on the business premises where the following 3 conditions are met:

  1. The meals are provided on a reasonable scale
  2. That all employees or all those at a specific location may obtain free or subsidised meals
  3. If the meals are provided in a restaurant or hotel at a time when meals are being served to guests/clients part of the dining area is designated for employees

Not everyone needs to use the facility they just need the option to use it and its is possible for senior management to have superior meals.

This exemption is not available where only select employees are able to get a free lunch.

HMRC are happy to accept Tea and Coffee as trivial benefits that can be ignored.

Benchmark Subsistance

Since April 2009 employers have been able to pay their employees HMRC approved flat rate allowances referred to as Benchmark Subsistance, the rates are:

  • £5 if you buy a breakfast and start your business journey before 6am
  • £5 if you’re out of the office on business for more than 5 hours, and buy one meal
  • £10 if you’re out of the office on business for more than 10 hours, and buy 2 meals
  • £15 if your business trip keeps you beyond 8pm, and you buy an evening meal

So £15 is the maximum

You can only claim if:

  1. travel is required as part of your dutues or you are working at a temporary work place
  2. you are away from your work place or home for more than 5 hours
  3. you are expected to pay for food and drink after starting your journey

Meal Vouchers

Vouchers can be issued tax free but only up to the value of 15p per working day and the voucher must be non-transferable and used for meal only.

Travel Expenses

I have separate blog on this topic http://stevejbicknell.com/2013/02/13/what-travel-expenses-will-the-taxman-allow/

steve@bicknells.net

Doctor help my Travel Expense has been disallowed

The raised traumatism on road

On the 16th December 2013 Dr Samad Samadian v HMRC had his appeal on Travel heard by The honourable Mr Justice Sales and it was decided to uphold the previous decision of the First Tier Tribunal.

After an enquiry lasting more than seven years and three tribunal hearings, the First-tier Tribunal led by Judge Kevin Poole acknowledged Dr Samad Samadian had a dedicated office in his home which was necessary for his professional activity.

However, the panel did not accept that the home office could be treated as the starting point for calculating private practice business mileage involving habitual journeys.

So in summary:

  • Home to Hospitals – Disallowed
  • Hospital to Hospital – Disallowed as Business Expenses (but could be allowed against Employment)
  • Visits to Patients – Allowed

Now would be a good time to check your tavel mileage claims to makesure they are valid.

steve@bicknells.net

 

 

Tax Free Childcare will the new rules be better or worse?

Mother and daughter with piggy bank

The Government wants to help working families and currently if you are an employee your employer can help with childcare and could for example buy childcare vouchers of up to £55 per week, the vouchers would be a tax free benefit to the employee. However, if you’re self employed you aren’t an employee so the rules don’t apply.

So recently there has been a consultation on what should be be done in the future.

The key proposals are:

  • New Scheme to go live in Autumn 2015
  • Working Families will open Voucher Accounts (self employed or employed)
  • As parents pay in the government tops up the account with 20p for every 80p paid in
  • Top up capped at £1,200
  • To be eligible all parent must work and not receive tax credits or be an additional rate tax payer

The chart below shows how it should work:

Childcare 2

 

steve@bicknells.net

 

 

 

 

 

 

How to have a tax free Christmas

the unlike trio 01/Devil, Angel and Santa celebrating Xmas

Christmas Parties

·         HMRC have an Exemption (not an allowance) of £150.

  • available to employees generally or
  • available to employees generally at one location, where the employer has more than one location.

·         If the employer provides two or more annual parties or functions, no charge arises in respect of the party, or parties, for which cost(s) per head do not exceed £150 in aggregate.

The figure of £150 is not an allowance. For functions that are outside the scope of the exemption (see example at EIM21691) directors and employees, except those in an excluded employment, are chargeable on the full cost per head, not just the excess over £150, in respect of:

  • themselves and
  • any members of their family and household who attend as guests.

The cost of the function includes VAT and the cost of transport and/or overnight accommodation if these are provided to enable employees to attend. Divide the total cost of each function by the total number of people (including non-employees) who attend in order to arrive at the cost per head.

Christmas Gifts from suppliers to employees

Certain gifts from third parties are tax free if all these conditions are satisfied:

• the gift consists of goods or a voucher or token only capable of being used to obtain goods, and

• the person making the gift is not your employer or a person connected with your employer, and

• the gift is not made either in recognition of the performance of particular services in the course of your employment or in anticipation of particular

services which are to be performed, and

• the gift has not been directly or indirectly procured by your employer or by a person connected with your employer, and

• the gift cost the donor £250 or less, and

• the total cost of all gifts made by the same donor to you, or to members of your family or household, during the tax year is £250 or less.

Some other gifts are not taxable. If you earn at a rate of less than £8,500 a year and you are not a director, a gift to mark a personal occasion, such as

a wedding present, which is not a reward of your employment, is not taxable. If you earn at a rate of £8,500 a year or more, or you are a director,

any gift from your employer is taxable unless your employer is an individual and makes the gift in the course of family, domestic or personal relationships.

Seasonal gifts from Employer to Employee

An employer may provide employees with a seasonal gift, such as a turkey, an ordinary bottle of wine or a box of chocolates at Christmas. All of these gifts can be treated as trivial benefits. . For an employer with a large number of employees the total cost of providing a gift to each employee may be considerable, but where the gift to each employee is a trivial benefit, this principle applies regardless of the total cost to the employer and the number of employees concerned. If a benefit is trivial it should not be included in a PSA (EIM21861).

If the gift extends beyond one of the items mentioned above, for example from a bottle or two to a case of wine, or from a turkey to a Christmas hamper, you will need to consider the contents and cost before being able to determine whether the benefit is trivial.

PAYE Settlement Agreement (PSA)

For practical purposes it may be that small cash and money’s worth benefits can be included in a PSA.

PAYE Settlement Agreements (PSA’s) are requested by Employers and subject to agreement with HMRC. Under this agreement the employer will be responsible for accounting for any tax and national insurance liabilities arising. Any items covered by a PSA will not need to be shown on forms P35 and P11D at the end of the tax year.

steve@bicknells.net

10 creative ways to cut your overheads

Businessman struggling with large Expenses

Making a profit and generating cash is vital to all businesses and a key way to improve profit is to reduce overheads, here are a few ideas:

  1. Re-think your office/premises requirements – Premises are big cost for most businesses, could you operate in a smaller space and sub-let part of your offices? could you work from home?
  2. Telecommute – Technology effectively reduces distance, so there is no need to require administrative people or specialists to be physically located together. Use VOIP, Skype and Video Conferencing.
  3. Cars – Company Cars can be expensive, time consuming to manage and emotive, why not consider car allowances
  4. Staff – Generally the biggest overhead is people, consider outsourcing rather than having the fixed overhead of in house staff
  5. Shop around – Are you getting the best deals on Stationery, Printing, Insurance, Light & Heat…..
  6. Students – Students, apprentices and interns are eager to learn and will be less expensive then experienced employees
  7. Refinance Debt – Could you reduce the cost of borrowing? could you borrow from your Self Invested Pension Plan?
  8. Paper –  Sorting, filing, and finding files requires time and space. Purchase a scanner and scan all important papers and keep them in well organised electronic files to save space and administrative costs.
  9. Go Green – Reducing waste and saving energy will save money too
  10. Buy Second Hand – Second hand office furniture is plentiful and its cheaper than buying new

steve@bicknells.net

10 ways to pay less tax

Money makes rich man very happy

You are entitled to plan your tax affairs in a way that makes sure you do not pay more tax than you have to. There are many legitimate ways in which you can save tax, or example by saving in a tax-free ISA (Individual Savings Account), making donations to charity through Gift Aid, claiming capital allowances on assets used in your business or paying into a pension scheme.

Here are 10 ways to pay less tax:

  1. Choose the right business structure for your business – most businesses start out as sole traders but once they start making profits convert to limited companies, this is because sole traders pay income tax starting at 20% and national insurance class 2, £2.70 per week and class 4, 9% on profits between £7,755 and £41,450, whereas, in a company a you could pay the tax and NI  free salary of £7,748 and then pay dividends from profits after corporation tax of 20%
  2. Employ your family – Children can legally work from the age of 13 which means they can perform activities which are relevant and justifiable in your business. Each member of your family has a tax free allowance of £9,440 (2013/14).
  3. Avoid earning more than £100,000 – Once you earn over £100,000 you start to lose your personal allowance, when earnings are above £118,880 all of your allowance of £9,440 will have been lost
  4. Pay into your Pension – Currently you can pay £50,000 per year into to your pension
  5. Pay Dividends – Generally directors will take a low directors fee and the rest of their income in Dividends
  6. Claim Expenses – You may well have an office at home and use your car for business
  7. Use Company Assets – Sometime the Benefit in Kind Tax works in your favour, so you could get the business to buy the assets for you to use for example a commercial vehicle or computer equipment
  8. Buy Assets – You should be able to buy assets with a loan or on credit but you will get the tax relief as soon as you take ownership
  9. Check for Building Assets – do have integral building assets
  10. R&D – Could you claim R&D tax credits

steve@bicknells.net