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Benefits In Kind and Expenses Payments
05/06/2009
It is that time of the year when employers will be busy gathering information relating to the provision of benefits in kind and expenses payments to their employees, the filing date of the relevant HMRC forms being 6 July 2009. Richard Lineham Director of Cedar & Co Chartered Certified Accountants in Alfreton advises that the implications of late submission or indeed incorrect details can prove to be quite punitive and it is essential that proper care is taken when completing the returns.
With expenses payments or re-imbursements to a higher paid employee, there appears to be a general misconception that so long as these are business expenses there is no requirement to disclose the information. The strict rule is that, unless a dispensation has been granted, the appropriate details should be returned, with the exception of mileage allowances that are paid at the recommended rates.
Some benefits in kind are free of tax and national insurance charge. and, if properly structured, these can be provided as part of a salary sacrifice scheme which can lead to substantial savings for both the employer and employee alike. As well as the taxation benefits, an astute employer may also wish to provide certain benefits for commercial reasons: for example, the provision of medical cover for key employees should ensure that in the event of an illness, the employee concerned has access to almost immediate medical attention thereby expediting his return to work.
Richard adds that certain benefits in kind are an effective way of rewarding and incentivising employees and potentially produce an overall tax saving. He also commented that this is a win win situation and it is somewhat peculiar why there appears to be a general reluctance on the part of many employers to enter into such arrangements.
Submitted by Sarah Crennell