The commencement of 2016/17 sees major changes to the PAYE regime and new rules for the following:
Where employees claim travel and subsistence it must only be for a qualifying journey and it cannot include travel to and from a permanent place of work. This whole area has been subject to HMRC scrutiny over the years and has been further tightened particularly for certain contractors. Where contractors are working through an ‘umbrella company’ (employment intermediaries) or through their own company where ‘control’ (or IR35) can be demonstrated applying HMRC’s tests the travel expenses to the site where they are contracting can no longer be claimed.
For those employees where the journey is ‘qualifying’ the following may be claimed:
- Travel expenses
- The abolition of P11D dispensations
- New trivial benefit rules – for employees and company directors
Where employees claim travel and subsistence it must only be for a qualifying journey and it cannot include travel to and from a permanent place of work. This whole area has been subject to HMRC scrutiny over the years and has been further tightened particularly for certain contractors. Where contractors are working through an ‘umbrella company’ (employment intermediaries) or through their own company where ‘control’ (or IR35) can be demonstrated applying HMRC’s tests the travel expenses to the site where they are contracting can no longer be claimed.
For those employees where the journey is ‘qualifying’ the following may be claimed:
Travel & Expenses
| Mileage at 45p per mile (the first 10,000 miles and different rules apply to company vehicles) - unchanged |  |
Subsistence
If you’ve not got a receipt - one meal allowance per day paid in respect of one instance of qualifying travel, the amount of which does not exceed:
(a) £5.00 where the duration of the qualifying travel in that day is five hours or more;
(b) £10.00 where the duration of the qualifying travel in that day is 10 hours or more; or
(c) £25.00 where the duration of the qualifying travel in that day is 15 hours or more and is ongoing at 8pm.
(a) £5.00 where the duration of the qualifying travel in that day is five hours or more;
(b) £10.00 where the duration of the qualifying travel in that day is 10 hours or more; or
(c) £25.00 where the duration of the qualifying travel in that day is 15 hours or more and is ongoing at 8pm.
Trivial Benefits
New rules have been introduced which actually are more generous than the old rules. An upper limit per benefit (which can include a party or lunch or say a bunch of flowers for a poorly staff member) including VAT of £50 has been introduced. There is no limit on the number of individual benefits that can be made to employees as long as they’re not family members of directors of a family business (HMRC term this close company). It’s important these ‘one offs’ are not paid in lieu of employment services and if the single benefit exceeds £50 then it is fully taxable. Interestingly it appears that non cash vouchers are allowable.
Directors (including family members who are also employees) are subject to an annual cap of £300 including VAT so that’s basically 6 lots of £50.
The annual function exemption of £150 per head (Christmas party allowance) still remains – don’t forget you mustn’t go over this or you lose it completely!
Directors (including family members who are also employees) are subject to an annual cap of £300 including VAT so that’s basically 6 lots of £50.
The annual function exemption of £150 per head (Christmas party allowance) still remains – don’t forget you mustn’t go over this or you lose it completely!
Help is Always at Hand
If you have any difficulties with these issues of if you have a concern. We're here to help our clients to make sense of these new changes and to provide guidance where necessary.
Call us today, or contact us to discuss your concerns and let us lay them to rest.
Thanks, Nigel.
Call us today, or contact us to discuss your concerns and let us lay them to rest.
Thanks, Nigel.
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