Payroll
...queries about use of vehicles and, in particular, the possibility of employees taking pool cars and vans home...
supply chains and jobs. However, it is the contracting authority that has the final decision on whether it deems a supplier is at risk or not. Home working Since the lockdown was brought into effect on 19 March, home working has become the norm for many of our clients’ employees. Some employers are paying an allowance to employees working from home, some make employees aware of the tax reliefs and some are doing nothing. The tax and National Insurance contributions (NICs) provisions allow for some reliefs to be applied to assist with the additional costs involved in working from home. However, care should be taken to ensure that any assistance from the employer is compliant with the tax/ NICs rules. If the employer contributes to the employee’s additional homeworking costs (e.g. heating/lighting), this can be done by a round-sum allowance without the need to provide receipts/evidence, provided that: ● there must be arrangements between the employer and the employee (ideally these should be formalised in writing) ● the employee must work at home regularly under those arrangements. ‘Regularly’ means that it follows a pattern, so an agreement to work at home two days a week would satisfy this requirement. The tax-free limit from 6 April 2020 is £6 per week (£26 per month). The legislation does not require the payment to be apportioned so you could pay the full £26 for working at home two days a week, but that is an internal decision. For most of our clients, it has not been possible to pay all of their new ‘home workers’ for financial reasons. Therefore,
what about employees claiming tax relief directly from HMRC? In the March 2020 Budget, the chancellor introduced the £6 per week (£26 per month) tax deduction for employees working from home, but only if certain, much stricter conditions (see section 336 of the Income tax (Earnings and Pensions) Act 2003) are met: ● that the employee performs ‘substantive duties’ at home ● that the employee would be unable to perform those duties at any existing work location ● the duties cannot be performed without the use of appropriate facilities
updated so caution should be exercised in encouraging your colleagues to make a claim in case tax relief is not granted given the strict conditions. Perhaps directing staff to the HMRC guidance and the online check and the P87 claim form (https:// bit.ly/2SDnxJj) is sufficient until HMRC provides an update. Use of vehicles We have seen a significant increase in queries about use of vehicles and, in particular, the possibility of employees taking pool cars and vans home rather than needing to come into an office or depot to collect the vehicle. The tax exemption conditions on pool cars are strict and it is quite likely that if one employee is allocated a car during the crisis then pool car status will be lost, and it will become a ‘company car’. The car could be parked outside the employee’s home without being used, but it only has to be ‘available for private use’ for the company car benefit tax charge to apply. Therefore, employers should review vehicle usage to ensure unintended tax/NICs liabilities are not accruing. In some cases, clients have agreed to pay for their employees to commute in their own cars due to the restrictions of using public transport. Any mileage claims for ordinary commuting should be paid through the payroll with tax/NICs deducted. Alternatively, employers could agree with HMRC to settle the tax/NICs via a PAYE settlement agreement, although that means grossing up the tax and in addition paying NICs on the tax paid. n
● no such appropriate facilities are available to the employee on the
employer’s premises (or the nature of the job requires the employee to live so far from the employer’s premises that it is unreasonable to expect him or her to travel to those premises on a daily basis) ● at no time either before or after the employment contract is drawn up is the employee able to choose between working at the employer’s premises or elsewhere. Taking each of the conditions into consideration, it would not appear to be unreasonable to contend that someone working from home during the crisis would meet the criteria. However, the conditions would not apply where the employee has an option to carry out certain duties at the normal workplace (i.e. the employees are required to work from home). It is hoped that HMRC will view claims sympathetically, but there are no guarantees. HMRC’s guidance has not been
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| Professional in Payroll, Pensions and Reward |
Issue 61 | June 2020
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