Forthcoming employer tax issues

A couple of benefits areas to be aware of in the preparation of 2017/18 forms P11D and advising in readiness for 2018/19 and 2019/20 car benefits.

2017/18 forms P11D will show different wording to take into account any benefits provided through optional remuneration arrangements (OpRAs) AKA salary sacrifice/flexible benefits schemes.

The “cost to you” will be replaced by “cost to you or amount foregone”. Following the legal changes to OpRAs – it should be the greater of the two amounts entered.

Also “cash equivalent” will read “cash equivalent or relevant amount”. Again, the figure to enter should be the greater of the cash foregone or the cost of the benefit to the employer.

The P46 (car) form will also show a new field of “cash foregone”.

To prepare for company car changes from 6 April 2018, clients and company car users alike should be aware of these initials and the changes they will bring.

RDE2 – real driving emissions (under Annex IIIA of commission regulations (EU) 2017/1151)

These are to be set in real world driving situations ie going up hill, engines under stress etc.

This is also referred to as the Euro 6d standard.

NOx – Nitrous Oxide (maximum emission of 80mg/km)

From 6 April 2018, diesel cars which do not meet the RDE2 standard will be subject to a supplement of 4%. It will also apply to diesel cars registered on or after 1.1.98 with no NOx emission figure. It will not apply to diesel hybrids.

Those cars which meet the RDE2 emissions standard will be exempt from the diesel supplement. Manufacturers will be required to make the NOx/RDE2 figures available. I’m not sure how that information will become available for existing car users who are affected. For new cars from 6 April 2018, I hope it will be as easily accessible as the CO2 emissions are currently.

The 37% maximum car benefit will remain.

Finally, to help with the increasing queries arising on electric car recharging, electricity is not (yet) considered by HMRC as a road fuel. This means there can be no fuel scale charge applied for a fully electric company car.

Where, an employee charges an electric company car at their workplace, no benefit in kind will arise, even where the car is used for business and private mileage. Where the employer fits a charging point at the employees home to allow them to recharge their company car overnight, again no benefit in kind will arise.

Where an employer reimburses an employee for electricity used to charge a company car at their home, the full cost of reimbursement should be reported on the P11D as a benefit in kind. The employee can claim tax relief for their business mileage.

The provision of a charging point at the home of an employee by an employer is a taxable benefit where the car belongs to the employee. The VAT inclusive cost to the employer should be treated as earnings and suffer tax and NIC via RTI.

There is promise that the electric car and fuel position will be included in the Finance Act 2018, so we can expect further clarification then.

If you would like to discuss forthcoming employer tax issues, or you would like to speak with a member of our team, please contact Carol Watters or call 01772 821021 to be put in touch with a member of our Tax team.

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