HMRC has updated its guidance relating to the tax treatment of certain benefits and expenses paid to employees due to coronavirus, to explain how employers should proceed where they are providing coronavirus testing kits, or Personal Protective Equipment (PPE) to their employees.
If an employer has purchased coronavirus testing kits or tests completed by a third party to provide to their employees, then they are treated as a taxable benefit in kind on the employee.
Where employees are working in scenarios and the likelihood of the transmission of coronavirus is very high, and a risk assessment determines that PPE is required, then this must be provided to employees free of charge. The PPE must fit correctly. Providing PPE to employees is non-taxable. If an employee requires PPE to complete their job and the employer is unable to provide this, then employers must reimburse the actual expenses of employees purchasing PPE themselves. This is non-taxable and employees cannot claim tax relief on these expenses from HMRC.
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U-turn on tax treatment of coronavirus (COVID-19) tests 10 July 2020
Previously in its guidance on ‘How to treat certain expenses and benefits provided to employees during coronavirus (COVID-19)’, HMRC confirmed that coronavirus tests would be treated as a benefit in kind for tax purposes. This decision, however, seems to have changed, and the guidance now states that coronavirus tests are not treated as a benefit in kind for the purposes of tax. If businesses employ healthcare workers and other eligible front-line staff who get a test through the government’s national testing programme, there is no tax due to be paid, and no requirement to report a benefit to HMRC. There is information on the national testing scheme in the essential workers: get a test today to check if you have coronavirus guide. For employers providing testing kits to their employees, outside of the government’s national testing scheme, there will also be no Income Tax or Class 1A National Insurance (NI) contributions due, whether the kits are provided directly or purchased to be carried out by a third party.
Guidance on the topic will be updated in due course.
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Policy paper and draft legislation produced in relation to Income Tax changes to the van benefit charge 24 July 2020
HMRC has published a policy paper and draft legislation which, from tax year 2021-22, will serve to reduce the van benefit charge for zero emissions vans to zero.
Amendments to existing legislation will mean that the cash equivalent of the van benefit charge will be reduced to zero for vans emitting zero carbon dioxide emissions. This is only applicable to vans that cannot emit CO2 under any circumstances whilst being driven. This measure was announced at Budget, in March 2020. This is in support of the government’s objectives relating to decarbonisation and air quality initiatives and encourages the use of more environmentally-friendly goods vehicles by reducing the level of tax charge that would otherwise be applicable. Vans are typically more polluting than cars and often do more mileage. A substantial amount of domestic UK greenhouse gas is created by road transport, so it is hoped that this move will help to incentivise the uptake of zero emissions vans, which will subsequently have a positive effect on the environment.
This will impact any businesses providing company zero emission vans and employees who are provided with them, where they are also made available for personal use and the restricted private use condition is not met.
The Chartered Institute of Payroll Professionals
Payroll: need to know
cipp.org.uk
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