Office equipment, benefit charges and returning to the office

It’s great that after 15 long months we’re finally able to think about safely returning to the office on a more permanent basis. But be careful you don’t inadvertently incur any taxable benefit charges you, or your employees, may find yourselves liable for.

If you supplied your employees with any office equipment to enable them to work from home during the pandemic, you may have incurred a tax liability for both them and yourself.

If you allow your employee to keep their equipment, at any stage of their employment, you are transferring the ownership to them. This is treated as a benefit by HMRC, and a benefit charge will arise on the market value of the equipment at the time of the transfer.

There are a few ways the liability will not arise, or will be reduced:

• If your employee pays you the full market value of the equipment at the time of the transfer of ownership, then no liability will be due.
• If the employee returns all the equipment back to you when they return to the office, there will be no transfer of ownership, and therefore no liability.
• If the employee makes a contributory payment to you of less than the market value for the equipment, then the liability will only be due on the balance of the prevailing value of the equipment (benefit = market value, less anything made good by the employee).

If your employee began working from home because of the coronavirus, and purchased their equipment to do so, unless you have stipulated to the employee that they must transfer ownership to you, then the ownership remains with the purchaser (the employee). In this instance, even if you reimbursed the full cost of the equipment to your employee, there is no benefit liability on the reimbursement. Technically there is no charge because you are allowing your employee to keep something they already own.

If you do find that there is a benefit charge liability due, you can report this to HMRC in a number of ways:

• You can choose to report any expenses or benefits on your PAYE Settlement Agreement. This way you will settle any tax and NI contributions due for both you and your employee. If you don’t already have a settlement agreement, or need to add items to an existing agreement, you can apply to HMRC here.
• If you are payrolling benefits in kind through your Payroll Software, you can add any charge, if appropriate, through your payroll.
• If you report expenses and benefits through P11D returns, then report any applicable charges on the form.

 

Further information, and to check which expenses are taxable if your employee has worked from home due to the coronavirus, is available on the .GOV website here. If you are unsure if a charge has arisen check with HMRC.

If you need assistance with processing benefits through your Sage 50 Payroll or Sage Business Cloud Payroll software, or would like to start processing your own payroll, please get in touch with us. At BOSS, not only can we supply HMRC approved Sage Payroll software, but we can help you get up and running in no time – so you can concentrate on the important job of running your business.

Call us on 01462 374073, or email info@boss-limited.com for a no obligation enquiry.