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Expenses and benefits filing deadlines

The deadline for submitting the 2019-20 forms P11D, P11D(b) and P9D is 6 July 2020. Employees must also be provided with a copy of their P11D by the same date.

Employers pay Class 1A National Insurance contributions on most benefits. If you provided taxable benefits to staff or directors your business is likely to have a Class 1A employers’ NIC liability. The deadline for paying class 1A NICs is 22 July 2020 (or 19 July if paying by cheque).

P11D forms are used to provide information to HMRC on all Benefits in Kind (BiKs), including those under the Optional Remuneration Arrangements (OpRAs) unless the employer has registered to payroll benefits. This is known as payrolling and removes the requirement to complete a P11D for the selected benefits. However, a P11D(b) is still required for Class 1A National Insurance payments regardless of whether the benefits are being reported via P11D or payrolled.

Where no benefits were provided during 2019-20 and a form P11D(b) or P11D(b) reminder is received, employers can either submit a 'nil' return or notify HMRC online that no return is required. Employers should ensure that they complete their P11Ds accurately, including the full details of cars and loans provided. There are penalties for late filing of returns.

Any tax or National Insurance due for 2019-20 under a PAYE Settlement Agreement (PSA) needs to be paid electronically to clear into HMRC’s bank account by 22 October 2020 (19 October 2020 for payments by cheque).

Source: HM Revenue & Customs Wed, 10 Jun 2020 05:00:00 +0100

Reimbursing expenses for home office equipment

HMRC has updated its guide for employers who have employees working from home due to the COVID-19 outbreak. This could be a result of the workplace being closed or because employees are following government advice to self-isolate.

The updated guidance reflects temporary changes to the rules for reimbursing employees for the purchase of office equipment whilst working from home. The guidance originally published on 26 March 2020 stated that if employers reimburse expenses for office equipment their employees have bought that this is taxable and should be reported on the employers PAYE Settlement Agreements.

In a written statement published on 13 May 2020, Jesse Norman, The Financial Secretary to the Treasury announced the introduction of a temporary measure to support employees who are working from home as a result of the pandemic. This temporary measure states that employer reimbursements for the cost of home-office equipment expenses will be exempt from tax and NICs.

The expenditure must meet the following two conditions to be eligible for relief:

  1. That equipment is obtained for the sole purpose of enabling the employee to work from home as a result of the Coronavirus outbreak, and
  2. The provision of the equipment would have been exempt from Income Tax if it had been provided directly to the employee by or on behalf of the employer (under section 316 of ITEPA).

The exemption is a temporary measure and will have effect from the day after the regulations come into force until the end of the tax year 2020/21. However, we are told that HMRC will exercise its collection and management discretion and will not collect tax and NICs due on any reimbursed payments made from 16 March 2020 (the date the government recommended working from home) to the date these regulations take effect.

Source: HM Treasury Wed, 27 May 2020 05:00:00 +0100

Employee car ownership schemes

An Employee Car Ownership Scheme (ECOS) is a set of arrangements whereby employees acquire cars from a specified, often single source and within a specified financing framework. The use of an ECOS can effectively be seen as a halfway measure between providing a company car and leaving an employee to make all their car arrangements privately.

An ECOS gives employees similar benefits to having a company car, for example a new car on a regular basis, and/or central organisation of insurance and servicing but is structured in such a way that normal car and fuel benefit provisions do not apply.

HMRC has published special guidance on the ECOS due to the Coronavirus restrictions. If an employee has not been able to return the car to the dealership or factory for its assessment, there may be an Income Tax charge on the amount of the loan still owing.

If the loan period was less than 4 years, it may be possible for the employee to arrange an extension with the loan provider for a few more months. This will cover the period until the car can be returned and the loan settled. If this is done, HMRC will accept that the arrangements do not give rise to the Income Tax charge. If, however, the loan is extended beyond 4 years, an Income Tax charge will arise.

Source: HM Revenue & Customs Wed, 27 May 2020 05:00:00 +0100

New advisory fuel rates published

Advisory fuel rates are intended to reflect actual average fuel costs and are updated quarterly. The rates can be used by employers who reimburse employees for business travel in their company cars or where employees are required to repay the cost of fuel used for private travel. HMRC accepts there is no taxable profit and no Class 1A National Insurance on reimbursed travel expenses where employers pay a rate per mile for business travel no higher than the published advisory fuel rates.

Employees can also use the advisory fuel rates to repay the cost of fuel used for private travel. In this case, HMRC will accept there is no fuel benefit charge. The advisory rates are not binding if you the employer can demonstrate that employees cover the full cost of private fuel by repaying at a lower rate per mile.

The latest advisory fuel rates become effective on 1 June 2020. Fuel rates are reviewed four times a year with changes taking effect on 1 March, 1 June, 1 September and 1 December. You can use the previous rates for up to 1 month from the date the new rates apply.

The new rates are as follows:

Engine size     Petrol – amount per mile   LPG – amount per mile
1400cc or less      10p 6p
1401cc to 2000cc       12p 8p
Over 2000cc       17p 11p

 

Engine size      Diesel – amount per mile
1600cc or smaller   8p
1601cc to 2000cc     9p
Over 2000cc   12p

Hybrid cars are treated as either petrol or diesel cars for this purpose.

Advisory Electricity Rate

HMRC accepts that if you pay up to 4p per mile when reimbursing your employees for business travel in a fully electric company car there is no profit. While electricity is not considered a fuel for tax and NICs purposes, the Advisory Electricity Rate is now published quarterly alongside the other advisory fuel rates.

Source: HM Revenue & Customs Wed, 27 May 2020 05:00:00 +0100

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