From 6th April 2016, tax expenses, which an employee would be eligible to deduct for income tax purposes, will be exempt from income tax. This removes the need for a dispensation from HMRC.
If, however, flat rate expenses are paid after 6th April 2016, then an 'Approval Notice' will be required from HMRC. Presumably this will apply to the scale rate expenses for travel & subsistence eg Breakfast rate £5; One meal (5 hour rate) £5; One meal (10 hour) rate £10 and the late evening meal rate of £15.
From 6th April 2016, employees receiving Benefits in Kind will be subject to tax on the full benefit, regardless of their level of income.
No tax will be charged on the provision of board and lodging to home care workers, by reason of their employment. However, other workers such as hotel staff may be adversely affected.
We recommend that you review any benefits currently payable to lower paid employees.
During 2015/16, regulations will be introduced to allow employers to voluntarily process certain benefits via payroll. This will remove the need to include the benefits on form P11D.
A personal service company is a small limited company through which an owner/director offers his/her personal services. Where the company is subject to IR35, then there will be restrictions on the amounts which can be claimed on travel and subsistence.
There will also be restrictions on travel and subsistence claims for agency and umbrella companies.
The new rules will apply from 6th April 2016.
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