Considering the impact COVID-19 has had on people’s working lives, HMRC have released guidance that sets out how certain expenses and benefits provided to employees will be treated, both when working from home and as they return to work in the office.
Where a place of business has closed and employees are working from home following advice to self-isolate, certain expenses will not be treated as taxable benefits for the tax year ending 5 April 2021. These include the following:
- Providing a mobile phone and SIM card to employees.
- Providing broadband internet connection when there wasn’t one already available.
- Providing computer hardware, office supplies and office equipment to employees on the conditions that they are needed for the employee to be able to work from home and there is no significant private use.
- Providing loans to help employees, where the total outstanding value is less than £10,000 in the tax year, and the loan is not ultimately released or written off.
Refunding or reimbursing an employee for their transportation costs from work to home is normally a taxable benefit, however it will be exempt where the following conditions are met:
- The employee has to work later than usual, and at least until 9pm.
- This is not a regular occurrence.
- By the time the employee finishes work, public transport has either stopped or it would be unreasonable to expect them to use public transport.
- The transport used is either taxi or similar road transport.
This would also apply where employees usually travel to work with other employees using a car-sharing arrangement, but due to unforeseen or exceptional circumstances (which are coronavirus related) this arrangement stops, then the transport cost or reimbursement of those employees traveling from home to work, may also be exempt. The number of exempt journeys for these purposes, cannot be more than 60 in a single tax year, including both late night journeys and any failure of car-sharing arrangements together.
Some businesses may also be considering to pay employees in shares while offering a salary reduction in order to deal with cash flow issues faced during the COVID-19 crisis. Taking this approach can have several employment and corporate tax issues that need to be considered, therefore navigating these issues in advance will be fundamental for a smooth and effective implementation.
If you think the above may be of relevance to you or need further advice please do not hesitate to contact us.