CORONAVIRUS: HMRC guidance on the tax treatment of expenses
HMRC has issued further guidance on the tax treatment of expenses and how these should be reported:
• Unless a statutory exemption applies, providing living accommodation to an employee working at a permanent workplace will remain taxable.
• Tax relief is available for accommodation at a temporary workplace (less than 24 months) although this should still be reported on the P11D.
• Lodging expenses (including subsistence) if an employee cannot return home is taxable and can be reported through a PAYE Settlement Agreement.
• The use of a company car or employees being reimbursed fuel costs for undertaking volunteer work is taxable and should be reported through a PAYE Settlement Agreement.
• Normally refunding costs of transport from work to home are taxable although there is an exemption for irregular late-night travel if conditions are met. The exemption has been expanded to include employees who regularly travel to work in a car with one or more other employees but are unable to do so due to COVID-19. The maximum number of journeys under the exemptions is 60 in any tax year.
• Free or subsidised meals may be tax free if offered to all employees and are limited to a reasonable value.
• Company cars in the possession of the employee remain “available for private use” even if the employee has been instructed not to use the car and asked to keep photographic evidence of the mileage before and after the period of furlough. This applies even if the car cannot be physically returned or collected although HMRC will accept a car is no longer available if car keys (including tabs or fobs) are returned to the employer or a third party as instructed by the employer. Where the contract has not been terminated, this will only apply from 30 days after the keys are no longer available.
The full guidance can be found at: https://www.gov.uk/guidance/how-to-treat-certain-expenses-and-benefits-provided-to-employees-during-coronavirus-covid-19
Coronavirus Job Retention Scheme – UPDATE
The online system has been updated so that a draft application can be saved although the claim must be submitted within 7 days of starting it.
Additional Funding to Local Councils – NEW
The government is to provide £617 million to local authorities to provide additional support to small businesses, particularly those that pay council tax rather than business rates, and so have missed out on other support.
Whilst local authorities have discretion based on local economic need, the government has asked them to prioritise businesses in shared spaces, regular market traders, small charity properties that would meet the criteria for small business rates relief, and bed and breakfast owners.
To qualify, a business must be small, under 50 employees, and they must also be able to demonstrate that they have seen a significant drop of income due to coronavirus restriction measures.
The maximum grant will be £25,000 with councils having further discretion on payments of up to £10,000.
Health Warning: Tax Refunds
Please be aware that HMRC do not tell individuals about refunds or penalties via text or phone call and this seems to be an area of particular focus at present.
Such communications can be reported to HMRC so that they can monitor and trace see the link below:
Re-cap, the previous measures introduced were as follows:
- A Statutory Sick Pay Relief Package for SMEs
- A 12-month business rates holiday for all retail, hospitality and leisure businesses in England
- Small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief
- Grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000
- The Coronavirus Business Interruption Loan Scheme offering loans of up to £5 million for SMEs through the British Business Bank
- A new lending facility from the Bank of England to help support liquidity among larger firms, helping them bridge Coronavirus disruption to their cash flows through loans
- The HMRC Time To Pay Scheme
- Coronavirus Job Retention Scheme
- Deferring VAT and Income Tax Payment
- Protection From Eviction
- ‘Empty’ Business Rates Relief
- Self-employment Income Support Scheme
- Employee Expenses - General
- Insolvency Rules
- Workplace Pensions
- Employee Expenses – Cars
- Coronavirus Large Business Interruption Loan Scheme
- Coronavirus Future Fund
- "Support Finder" Tool
- HMRC Videos and Webinar
- Coronavirus Bounce Back Loan
- Pension Schemes - Small Self-Administered Schemes (SSAS) and Self-Invested Personal Pensions (SIPP)