MY CIPP
The CIPP's Advisory Service team provides answers to popular questions
Q: An employee has arranged for himself to undergo work-related training at the request of his line manager. The company has agreed it will reimburse the cost of the training to the employee. Can you advise if this is required to be reported as a taxable benefit in kind (BiK)? A: Providing the training is work-related and falls within the exemption of section 250 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA), there will not be any taxable benefit to the employee and so does not require reporting. It does not matter whether the employer directly incurs the expenditure or reimburses the employee. The exemption covers amounts that would otherwise be taxable as earnings, as a BiK. Please see https:// bit.ly/2Jph7bE.
exemption would need to be reported as a BiK. If the employer decides to put the awards in a PSA instead you would need to apply to HM Revenue & Customs (HMRC) in advance of them being given. Q: An employee who is a company car user (and had the same vehicle all tax year) has been issued with a company fuel card, with effect from 1 March. We are aware that this is a taxable benefit; however, can you confirm the value that needs to be reported? Do we pro- rata the car fuel benefit for when it is available? A: Unlike company cars that are taxed on when they are available to an employee, if an employee is issued with a fuel card relating to a company car that they are already in receipt of, the employee is taxed on the full annual charge of the car fuel benefit charge. It is only if the employer withdraws the use of a fuel card can the annual charge be pro-rated to the days the fuel card was available. If the employee has a new car mid-year and a fuel card was issued for that specific car, then the days that the new car was unavailable can be considered to reduce the benefit charge. Best practice would be to not issue a fuel card to this employee until the start of the new tax year. Q: We have found that it would reduce business travel costs to provide certain employees with railcard passes which they would be able to use also for personal travel. Would a taxable benefit arise? A: In normal circumstances, as the
employee would have personal use of the card, the full cost of the travel pass would need to be reported as a BiK; however, there is an exception. Guidance on providing travel cards in this situation advises that if it makes better business sense to provide a travel card which is predominantly used for business but can also be used for personal travel, the employee should not be penalised. For the card not to be reported as a BiK, the employer should analyse the cost of individual reimbursement of all business travel against the cost of providing the card. If the cost of the card equates to less than reimbursement, then this would not be reported as a BiK. All travel should still be documented so that spot analysis can be actioned to ensure that the above applies on a regular basis. If the provision of the card is more than what would have been reimbursed, the difference between the cost of the card and reimbursement would be reported as a benefit to the employee. Details and examples of both situations can be found here: https://bit.ly/346cAoc. Q: Our company offers employees healthcare cover, and meets the costs. We also invite employees to add their spouse and dependants to this cover. If an employee takes up the offer to add additional policy holders, we ask that the employee covers this cost and payroll deducts this from the employee’s net pay each pay period. When completing P11D returns for those who have additional policy holders, what figure should be reported?
Q: Should we add long-service awards to our pay as you earn
(PAYE) settlement agreements (PSA) calculations? These awards are an online credit card that can purchase anything but are only exchangeable for goods. The value of the award varies from £250.00 to £5,000.00. A: The award would be deemed as a non- cash award. You do not have to report or pay tax on non-cash awards if all of the following apply: ● the employee has worked for you for at least twenty years ● the award is worth less than £50 for each year of service, and ● you haven’t issued them a long-service award in the last ten years. Anything that didn’t meet the above
The CIPP Advisory Service is available * 9a.m. to 5p.m. Mondays to Thursdays, and 9a.m. to 4.30p.m. on Fridays. Call 0121 712 1099 or email advisory.service@cipp.org.uk .
| Professional in Payroll, Pensions and Reward | May 2020 | Issue 60 8
*please see summary at cippmembership.org.uk for details.
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