Benefits In Kind, Shares Issued To Employees and Directors & Company Car Advisory Fuel Rates Updates!

Reporting Benefits In Kind and Shares Issued To Employees and Directors

It’s that time of year again when the annual return of benefits in kind and expenses paid on behalf of directors and employees needs to be made to HMRC.

Unless the employer holds a dispensation, this includes expenses such as travel and subsistence that are reimbursed to employees and directors.

Note however that from 2016/17 the employer will no longer need such a dispensation if the expenses are wholly, exclusively and necessarily incurred in the performance of the individuals’ duties.

Remember also that whenever companies issue shares to employees and directors they need to consider whether or not an entry needs to be made on the end of year HMRC Form 42. This form is used to report events relating to shares and securities obtained by reason of employment and needs to be submitted online by 7 July following the end of the tax year. As usual we can assist you on complying with these reporting requirements.

Trivial Benefits In Kind Now Exempt

Employees are no longer taxable on trivial benefits in kind, provided the cost to the employer is less than £50. This must not be cash or vouchers or a reward for past or future services but is intended to cover gifts of flowers on a birthday or a turkey at Christmas.

Company Car Advisory Fuel Rates

These rates are the suggested reimbursement rates for employees’ private mileage in their company cars and are reviewed each quarter on 1 March, 1 June, 1 September and 1 December.  In line with an increase in fuel prices, the rates that apply from 1 June 2016 are shown below:

Engine Size	Petrol	Diesel	LPG
1,400 cc or less	10p		7p
1,600 cc or less		9p (8p)
1,401cc to 2,000cc	13p (12p)		9p (8p)
1,601cc to 2,000cc		10p
over 2,000cc	20p (19p)	12p (11p)	13p

Where there has been a change, the rates that applied prior to 1 June 2016 are shown in brackets.

You can use the previous rates for up to 1 month from the date the new rates apply.

If you reimburse your employees the tax free amount of 45p a mile (25p after 10,000 miles) for using their own car for business purposes, then 20/120ths of the above amounts can be reclaimed as input VAT by your business.

For example, a diesel-engine car emitting over 2,000cc = 12p x 1/6 = 2p input VAT a mile.

Contact us for all your Tax needs!
☎ 020 89310165 | ☏ 07900537459 | ✉ info@apjaccountancy.com 

Payrolling Of Benefits In Kind - HMRC Update!

Legislation to require employers to report 'Benefits in Kind' in real time as opposed to the end of year form P11D was included in the first Finance Act of 2015. However, there are concerns amongst accountants that this should not be mandatory until 2017/18 at the earliest, as many employers are only just getting to grips with real time processing of basic wages and salary data.

The new system will require employers to calculate the cash equivalent of the Benefit in Kind and effectively spread it over the tax year. The tax due on benefits will then be collected by adding a notional value to the employee’s payroll, rather than reporting the Benefits in Kind separately on the end of year form P11D.

End of Informal Payrolling process

If you have an existing informal payrolling arrangement with HMRC this will stop on 5 April 2016.

If you continue with this process the P11Ds you submit may be processed and your employees may be taxed twice on their benefits. To avoid this you should use the online PBIK service to register the benefits you’re payrolling. This means you’ll no longer need to submit P11Ds for payrolled benefits and expenses.

More about Payrolling Benefits in Kind online service

Please get in touch with us if you would like to use this system for 2016/17 as you will need to register with HMRC before 6 April 2016.
☎ 020 89310165 | ☏ 07900537459 | ✉ info@apjaccountancy.com