Tax Planning Tips
Personal and family planning Contents This content is for general information only and is not intended to be advice to any specific person. As with all tax planning, you are recommended to seek competent professional advice before taking or refraining from taking any action on the basis of the contents of this publication. The Financial Conduct Authority does not regulate tax advice, so it is outside the investment protection rules of the Financial Services and Markets Act and the Financial Services Compensation Scheme. This publication represents our understanding of law and HMRC practice as at 3 May 2023. All rights reserved. The Spring Budget in March 2023 relaxed the limits on contributing to pension savings for individuals and their employers and removed the lifetime limit on the value of taxefficient pension pots. The bad news is that the threshold for 45% tax was lowered to £125,140 from April 2023, and for taxpayers in Scotland the highest rate of tax above that threshold was raised to 47%. Personal tax allowances and income tax bands have been frozen until April 2028, which will effectively raise taxes by the operation of inflation. State pensions and benefits have risen by 10.1%, but the average rate of inflation has been running at over 10% since July 2022 with food and drink, electricity and gas increasing by much more. There is pressure to raise wages, so anything you can do to keep your employees happy will help your business. This guide highlights 50 ways in which you can currently use certain tax reliefs to your advantage, and how to avoid some of the tax penalties. It can help you navigate the complexity of certain tax rules and create more tax-efficient plans. Introduction TAX PLANNING TIPS | May 2023 2 Savings and investment Your property Retirement planning Estate planning Your business Employment and remuneration
Personal and family planning Check your PAYE tax code HMRC changes PAYE tax codes dynamically when your salary changes, but it can’t easily distinguish between a temporary increase, such as a bonus, and a permanent pay change. Your tax code may also include estimated amounts of savings income, based on what you received in an earlier year. Check your PAYE code by signing in to your personal tax account at http://www.gov.uk/personal-tax-account and use the options there to amend any estimated income and correct any other errors. Transfer some of your unused personal allowance Married couples and civil partners can transfer 10% of their personal allowance between them (£1,260 for 2023/24), providing an overall tax saving for the couple. This transfer is not permitted if the recipient pays tax at a rate higher than the basic rate of 20% (higher than the intermediate rate of 21% for Scottish taxpayers). You can backdate a claim for up to four years, so a claim made by 5 April 2024 can include 2019/20. KEY GUIDE | April 2019 | Tax Planning Tips 3 TAX PLANNING TIPS | May 2023 Check the level of national insurance contributions (NICs) you pay If you have two or more concurrent jobs you may pay more NICs than you have to. You can reclaim any overpaid NICs from HMRC after the end of the tax year. However, you can prevent the overpayment occurring in the first place by deferring payment of NICs on one of your jobs by sending HMRC a completed form CA72A (either online or by post) by 14 February in the tax year, but ideally earlier. Top-up your state pension entitlement Check your NIC record for your entire working life in your personal tax account at http://www.gov.uk/personal-taxaccount. If there are gaps in that record you may not be entitled to the full state pension. Until 31 July 2023 you can fill any gaps in the NICs paid since April 2006 by paying voluntary class 3 NICs. After that date only gaps arising in the past six years can be filled in this way. If you and your partner both own homes when you marry or enter a civil partnership, choose which will be your main home Once married, you can have only one main home between you for tax purposes. If you both own separate properties which you continue to occupy for some periods, nominate the one that is likely to make the best use of your capital gains tax (CGT) main residence exemption. This needs to be done within two years of your marriage/civil partnership, otherwise HMRC will designate the property that you occupy for the majority of your time as your main residence. EXAMPLE Leila receives an annual salary of £45,000. Her husband has no taxable income, so doesn’t use his personal allowance. For 2023/24, they could save tax of £252 (£1,260 at 20%) by transferring 10% of the husband’s personal allowance to Leila. Tip If a property has been your nominated main home at any time, the gain for the last nine months of ownership is exempt from CGT.
When selling a home, be prepared to pay any CGT due within 60 days of the completion date If you sell or give away a UK residential property, you must report and pay any CGT due to HMRC within 60 calendar days of the completion date. This is done via an online UK Property Account, with a separate declaration of the same gain also required if you have to submit a self-assessment tax return. If there is no tax to pay you don’t have to report the sale on the UK Property Account, but it may still be relevant to your tax return. Penalties may be charged for reporting late and/or paying the CGT late. If you or your partner receive child benefit, check whether you have to pay a tax charge to pay back some of the child benefit received Where the highest earner in the family has income over £50,000, the extra tax charge for that person is equivalent to 1% of the child benefit for every £100 of their income over £50,000. To mitigate the tax charge, you can halt your child benefit payments, but keep the claim alive to protect the claimant’s state pension entitlement. For 2023/24, some basic rate taxpayers will be caught by the charge as the basic rate threshold is £50,270. If the income of the higher earner has fallen below £50,000, you can ask HMRC to start paying the child benefit again. Don’t delay, as the payments can only begin from the Monday after you ask HMRC to reinstate them. Plan to minimise tax when selling your trading company by spreading the shareholding between you and your spouse If you both meet the 5% shareholding test for two years or more before the sale and are both either an officer of the company or employed by it, you should both qualify for the 10% rate of CGT on any gains made when the company is sold. This reduced rate of CGT applies to the first £1 million of gains made on the disposal of qualifying business assets during each person’s lifetime. Don’t pay too much income tax on account in July and January If your income is reducing, perhaps because you are winding down to retirement, the payments on account of tax due by 31 July and 31 January may be too high as they are based on your taxable income for the previous tax year. You can apply to reduce the payments on account through your personal tax account or on your tax return. If you believe you have paid too much tax on account for 2022/23 submit your tax return as soon as you can to receive an early tax repayment. Savings and investment – making themost of your money Contribute up to £9,000 into your child’s Junior ISA The fund builds up free of tax on investment income and capital gains until your child reaches 18, when the funds can either be withdrawn or rolled over into an adult ISA. Relatives and friends can also contribute to your child’s Junior ISA, as long as the £9,000 limit for 2023/24 is not breached. Make the best use of tax-free savings and dividend allowances For 2023/24, savings income of up to £1,000 is tax exempt for basic rate taxpayers, with a £500 exemption for higher rate taxpayers. The tax-free dividend allowance of £1,000 is available for all taxpayers. Married couples and civil partners can save tax by ensuring that each person has enough of the right type of income to make use of these tax-free allowances. TAX PLANNING TIPS | May 2023 4 EXAMPLE Anna receives child benefit in respect of her two children and until recently made an annual profit of £60,000 from her self-employment. Some years ago she asked HMRC to halt her child benefit payments so she didn’t have to pay the tax charge. Anna predicts her net profit will be around £45,000 for 2023/24. On 5 April 2023, Anna asked HMRC to restart her child benefit and those payments will be made from 10 April 2023. Tip Estimate your income for 2023/24 and if this is likely to be less than £60,000, ask HMRC to restart your child benefit payments.
Take advantage of the individual savings account (ISA) investment limit and generate tax-free income and capital gains The maximum amount that can be invested in ISAs is £20,000 for 2023/24. You can put the whole amount into a cash ISA, a stocks and shares ISA, an Innovative Finance ISA, or any combination of the three as desired. Transferring funds into an ISA early in the tax year will maximise the amount of tax-free income arising in the year. ISAs can offer long-term tax advantages as an alternative to pension savings. Plan your capital gains to make best use of any capital losses If you realise capital gains and losses in the same tax year, the losses are offset against the gains before the CGT exempt amount (£6,000 in 2023/24) is deducted. Capital losses will be wasted if gains would otherwise be covered by your exempt amount. Consider postponing a sale which will generate a loss until the following tax year, or alternatively realising more gains in the current year. Generate a 50% income tax credit on an investment of up to £200,000 by investing through the Seed Enterprise Investment Scheme (SEIS) When you make a capital gain and reinvest that amount in SEIS shares, it can qualify for a maximum 50% CGT reduction on gains of up to £200,000. If the gain was taxable at 28% the overall tax relief is 64% (50% income tax plus half of 28%). Also, any capital gains arising on the SEIS shares are exempt from tax if the shares are held for at least three years. Beware that the income tax credit is clawed back if the shares are held for less than three years. Investing in small companies can be very risky, so take independent financial advice. Obtain a 30% income tax credit by subscribing for shares in a Venture Capital Trust (VCT) or an Enterprise Investment Scheme (EIS) In 2023/24, the maximum subscription in VCT shares is £200,000. The shares are exempt from CGT when they are sold. A subscription in EIS shares costing up to £2 million (investments in excess of £1 million must be made in knowledge-intensive companies) qualifies for the income tax credit. In addition, you can defer tax on your capital gains by reinvesting an unlimited amount of gains in EIS shares. VCT and EIS shares can be high risk investments and you must hold VCT shares for at least five years and EIS shares for three years in order to retain your income tax credit. Your property –making the most of bricks andmortar Let rooms in your own home to one or more lodgers Rent-a-room relief allows up to £7,500 of rent per property to be received tax free per year. The rooms must be let as residential accommodation in the home you live in, and no expenses can be claimed. If the gross rent is higher than £7,500, you need to declare the income on your tax return. However, you can then claim a deduction of £7,500 instead of the actual expenses incurred. Payments received under the Homes for Ukraine Scheme are not taxable and do not count towards the rent-a-room relief cap. When you occupy a second home tell HMRC which of your properties should be treated as your main home for tax purposes A property that has always been your main home is free of CGT on sale or disposal. Any other property that you used as your main home for a period will be exempt from CGT for the time you lived there, and for any period for which you elected for it to be your main home. If a property has been your nominated main home at any time, the gain for the last nine months of ownership is exempt from CGT, even if you do KEY GUIDE | April 2019 | Tax Planning Tips 5 TAX PLANNING TIPS | May 2023 Tip Invest in a small trading company under the Seed Enterprise Investment Scheme (SEIS) and gain a 50% income tax credit on an investment of up to £200,000. EXAMPLE Jerry is an additional rate taxpayer, and has £120,000 invested in a stocks and shares ISA. He uses his dividend allowance and CGT exempt amount against non-ISA income and gains. During 2023/24, the ISA produces dividend income of £4,000 and capital gains of £8,000. By investing in an ISA, Jerry has saved income tax of £1,574 (£4,000 at 39.35%) and CGT of £1,600 (£8,000 at 20%) for 2023/24.
TAX PLANNING TIPS | May 2023 6 not live there during that final period. You might not be able to nominate a property that is situated overseas. Let out your drive or garage for tax-free cash The property income allowance allows you to receive up to £1,000 income tax free from property that doesn’t qualify for rent-a-room relief (see above). This could be from letting out spare space in your garage – or even your drive – for commuter parking. If the gross income before deduction of expenses is no more than £1,000 you don’t have to report the income on your tax return. If the rent received is more than £1,000, you can deduct the higher of £1,000 or the actual expenses incurred, paying tax on the net amount. Check how many days your holiday accommodation is actually let for To qualify for a range of tax reliefs, each of your commercially let furnished holiday properties needs to be let for at least 105 days during the tax year and be available for short-term letting for at least 210 days. If you don't meet the minimum period of occupancy condition for 2023/24, a period of grace election will deem the test to be met if you met the threshold either in 2022/23 or in 2021/22. Where you let more than one UK holiday property, you can average the number of days of actual letting across all your UK properties. Retirement planning – preparing for the future Maximise tax relief on your pension contributions by using all of your annual allowance The annual allowance for 2023/24 is £60,000, but you can also use surplus allowance from the previous three tax years (see below). To avoid an annual allowance tax charge, the pension contributions made by yourself, plus those made by your employer on your behalf, must be covered by your available annual allowance. Beware that your annual allowance may be restricted to a maximum of £10,000 if your total income plus pension contributions for the year exceeds £260,000, and your net income exceeds £200,000. Your annual allowance is also restricted if you have already drawn more than the taxfree amount from a money purchase pension scheme. Always take professional financial advice before making a significant investment. Take advantage of your unused annual pension allowances from earlier years You can bring forward unused pension allowances of up to £40,000 from each of the three previous tax years, to boost your allowance for the current year (2023/24). This allows you to pay pension contributions over the current year’s annual allowance – in theory up to £180,000 – and still enjoy full tax relief on those contributions at your marginal tax rate. However, the total tax relievable pension contributions are also limited by your taxable earnings for the year. The calculations can be complex, so it is best to do your pension planning well before the end of the tax year. EXAMPLE Jane earns £100,000 per year and is opted into her workplace pension scheme. The pension contributions made by Jane and her employer amount to £8,000 per year (Jane contributing £3,000, and her employer £5,000), and this has been the case for the past three years. During May 2023, Jane won £100,000 on the premium bonds and wishes to maximise her pension contributions for 2023/24. Jane’s financial adviser calculates that Jane has unused annual allowances of £148,000 in 2022/23 being £32,000 (£40,000 – £8,000) from each of the years: 2020/21 to 2022/23 and £52,000 for 2023/24. Jane can pay up to £97,000 (£100,000 – £3,000) in additional pension contributions for 2023/24 as her total contributions are limited by her total earnings. Tip Furnished holiday accommodation can be registered as a business so it qualifies for small business rates relief, if the property is let on a commercial basis for short-term lets for at least 70 days in the year.
KEY GUIDE | April 2019 | Tax Planning Tips 7 TAX PLANNING TIPS | May 2023 paying down a mortgage or making some lifetime gifts to reduce the value of your estate below £2 million. The total value of the nil rate band is fixed until at least 6 April 2028. Long deceased spouses can help save IHT today Widows and widowers inherit the unused proportion of their late spouse’s or civil partner’s nil rate band for IHT – even if they died many years ago. This could mean that up to an extra £325,000 of the estate will be tax free. The residence nil rate band (see above) is also inheritable, regardless of when the first spouse died. Make a Will and tell people about it If you die with no surviving relatives and you haven’t made a Will, the intestacy rules mean that the whole of your estate will go to the government. That’s 100% tax. If you want your relatives, friends and favourite charities (see below) to benefit on your death, make a Will and ensure it can be found after you die. If you have a surviving spouse or civil partner, they may only get a portion of your estate if a Will can’t be found after your death. The residue will then be subject to IHT at 40% to the extent that it exceeds £325,000 (up to £500,000 if the residence nil rate band is available). Ask your employer to pay pension contributions to top-up your pay If you are due a pay rise and do not need the extra money day to day, you could ask your employer to pay the increase as a contribution directly into your pension scheme. The employer receives tax relief for the contribution and there are no NICs to pay – a saving for both you and your employer. You must agree in writing to adjust your salary before the revised pension contributions are paid for this arrangement to be taxeffective. Make pension contributions or charitable gifts to retain your child benefit Child benefit is clawed-back as a tax charge when the higher earner of a couple has adjusted net income over £50,000 (see page 4). You can reduce your annual adjusted net income to below this threshold by making pension contributions or charitable donations under Gift Aid. If your income is more than £50,270, meaning that the excess is liable to higher rate tax, this will also have the effect of keeping your total income within the basic rate band, and preserve your savings allowance at £1,000 rather than £500 (see page 4). Plan to sell your shares to your company on retirement, leaving your successors in control of the business The next generation of shareholders in your company may not have the cash to buy your shares when you exit the business. Instead of them having to borrow to finance the purchase, the company itself can buy your shares and cancel them, leaving the remaining shareholders controlling the company. You end up with cash and, provided a set of strict conditions are met, up to £1 million of the gain should qualify for business asset disposal relief and be taxed at no more than 10%. Estate planning – handing on your wealth Plan to maximise your inheritance tax (IHT) nil rate band on death Everyone has a nil rate band of £325,000 on which no IHT is charged. If you have children, or step-children, you can add up to £175,000 (known as the residence nil rate band) to your nil rate band by leaving your home to one or more direct descendants on your death, or to certain types of trust. Your Will needs to make it clear who should inherit the home. This extra relief is restricted to the net value of the home, after deduction of any mortgage. It is also restricted where your estate is worth over £2 million on death. It may be worth Tip You can carry forward unused pension allowances from the three previous tax years and use these to cover pension contributions greater than the current year’s annual allowance. EXAMPLE Mia’s estate is valued at £950,000 for IHT purposes. The estate includes her main residence valued at £300,000, but this is bequeathed to Mia’s brother, rather than to her two children (who inherit the remainder of the estate). Mia’s husband died five years ago, without using any of his nil rate band or residence nil rate wband. Currently, IHT of £120,000 (£300,000 at 40%) will be payable in respect of Mia’s estate on her death, but if Mia changes her will so that her children inherit her main residence, the IHT payable will be reduced to nil.
TAX PLANNING TIPS | May 2023 8 Cut your IHTrateby leavinggifts tocharity inyourWill By writing your Will so that at least 10% of your net estate is left to charities, the IHT on the remainder of your taxable estate will be charged at 36% instead of 40%. The exact calculation of your net estate is complex, so take professional advice when drawing up or amending your Will. Legalise your relationship to save IHT Being married or in a civil partnership will save IHT as your spouse/civil partner can inherit any amount from you tax free, as long as they are UK domiciled. This tax exemption doesn’t apply if you are not legally married to your partner. Your surviving spouse/civil partner can also inherit your unused nil rate band and residence nil rate band (together worth up to £500,000), which will save further IHT payable on their own death. Make regular IHT-free gifts out of your annual income Regular gifts out your net income are free of IHT provided the gifts don’t change your normal standard of living or reduce your capital assets. The amounts of the gifts and/or the recipients can be different each year. Use your IHT-free gift allowances In addition to regular gifts out of your net income (see above), you can make IHT-free gifts of up to £3,000 each tax year, and gifts on marriage/civil partnership ranging from £1,000 to £5,000 (depending on your relationship to those who are marrying). If you miss making the gifts totalling £3,000 in one year, you can catch up in the next tax year by giving a total of £6,000, but you can only carry forward the £3,000 allowance for one tax year. Invest in businesses to save IHT The value of shares in unquoted trading companies, including companies listed on the AIM stock exchange, are free of IHT if you hold them for at least two years. You don’t have to be involved in the company for the shares to qualify. The investment risk can be mitigated by investing in AIM portfolios, including AIM ISAs. Any interest you hold in an unincorporated business will generally also be free of IHT. Value let property correctly on death. To assess the amount of IHT due after a death, the executors must value assets at their open market value on the date of death. However, if a property was let at that time, the value should take into account the sitting tenant and the time left until the tenancy or lease can be surrendered. The value of a property where there is a sitting tenant can be lower than if there is vacant possession. Your business –making the rules work for you Choose the most tax-advantageous structure for your new business When starting a new business venture, it can be difficult to predict the level of income it will generate. If losses are a real possibility, running the business as a sole trader or partnership will give you maximum flexibility to set off those losses against your other income (see below). Where regular profits of £50,270 or more are expected, operating as a company will allow you to shelter undrawn profits (which would have been subject to higher rates of tax if received by an unincorporated business) and make tax-efficient pension contributions. The current rates of corporation tax are 25% on profits above £250,000 and 19% on profits up to £50,000, but a marginal rate of 26.5% applies on profits between these limits. This is still a favourable rate compared to the higher income tax rates of 40% and 45% (42% and 47% in Scotland). The amount of tax you pay overall will depend on the manner in which you extract funds from your business. Use the £1,000 trading allowance Sometimes it is difficult to know exactly when a business begins, as many start gradually in order to test an idea in the market. You can receive up to £1,000 per year of tax-free income from a trade without having to declare this to HMRC. Once you generate more than £1,000 of sales in a year you need to register your business with HMRC or risk a penalty. EXAMPLE Rebecca pays the quarterly gas and electricity bills of her niece and nephew out of her surplus net income. These regular gifts are free of IHT as they do not affect Rebecca’s lifestyle or eat into her capital assets.
Employment and remuneration – looking after your employees Feed employees with free or subsidised food in a staff canteen Where the food is available to all employees, or all who work at a particular site, there is no taxable benefit for employees when they receive free or subsidised food. A catering or restaurant business must designate an area exclusively for staff use to eat their employer-provided meals. Provide electric or low-emissions company cars For 2023/24, all-electric company cars can be provided to employees with a taxable benefit of just 2% of the list price of the vehicle. Where a hybrid car is provided with CO2 emissions of up to 50g/km and an electric-powered range of 130 miles or more, the taxable benefit is also 2%. The employer can claim a 100% first year capital allowance deduction for the cost of new wholly electric cars. Encourage clean commuting by providing electric charging points Provide electric vehicle (EV) charging points at your business premises for your employees to use. There is no taxable benefit for the employees who use the electricity to power their cars and the business can claim a 100% deduction for the costs of installing EV charging points before April 2025. Don’t miss your VAT registration requirement If your business is not VAT registered, you must keep an eye on your turnover for the previous 12 months on a rolling basis. When it exceeds £85,000, you must register for VAT by the end of the month following the month in which your turnover exceeds the threshold. Once registered, you must apply VAT to all of your sales (except those which are exempt) and submit VAT returns to HMRC using making tax digital (MTD) compliant software. You also need to keep your VAT records in a digital format. Make the best use of your trading losses As a serious self-employed business person (HMRC generally expects you to be working an average of at least 10 hours a week for your business), any trading losses you make can be set against your total income for the tax year in which loss arose and/or the previous year. Relief for a trading loss made in 2021/22 can then be extended to offset against trading profits made in the three previous tax years, but that relief must be claimed by 31 January 2024. There is a cap on how much loss can be offset against your total income (but not profits of the same trade) being the higher of £50,000 and 25% of your income for the year. This extended carry back of losses is not available for years after 2021/22. Lower your tax rate by involving your family When your taxable profits go above £50,270 per year, consider bringing in your spouse or adult children as partners in your sole-trader business. A partnership can spread the profits over the basic rate bands and personal allowances of your family members, keeping the average tax rate of the family below 40%. The proportion of profits allocated to each partner can vary each year, although it is advisable to have a partnership agreement drawn up to document this. Use your own car for business journeys By using your own car for business journeys, you can receive a tax- and NIC-free mileage allowance of 45p per mile for the first 10,000 miles, and 25p per mile for any additional miles, per tax year. These rates are the same whatever road fuel your car uses, including for electric cars. If you work for yourself, you can use these mileage rates to calculate the cost of the business journeys you take in your own car, which is generally easier than working out the business proportion of the entire running costs of the vehicle. TAX PLANNING TIPS | May 2023 9 Tip Keep accurate records of all business journeys you take, including the distance and reason for each journey. There are apps which you can download on your phone to make this easier. All those short trips to buy business supplies or visit customers add up. EXAMPLE On 6 April 2023, TW Ltd provided its director, Elaine, with a brand-new electric car which has a list price of £27,000. TW Ltd also pays for car insurance, servicing and any repairs. TW Ltd can claim a deduction of £27,000 plus the related running costs when calculating its trading profit. The taxable benefit for Elaine is £540 in 2023/24. If she is a higher rate taxpayer, the tax cost of using the car for the entire year will be just £216.
TAX PLANNING TIPS | May 2023 10 management and financing of the nursery, and the care must be provided on the employer’s premises (which must not be a private home) or in an area hired for that purpose. You will also need to meet local child nursery registration requirements. Increase employee morale with trivial benefits Employees and directors can be provided with gifts worth up to £50 per item which are totally free of tax and NICs. The gift must not be cash or a cash voucher, it must not be provided as a reward for services, and the individual must not be entitled to receive the item under any contractual obligation. Directors of close companies and their family members cannot receive more than £300 of such trivial benefits in any one tax year. Levels and bases of taxation and tax reliefs are subject to change and their value depends on individual circumstances. The Financial Conduct Authority does not regulate tax and trust advice, will writing, inheritance tax planning and estate planning. The value of your investment and the income from it can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances. Occupational pension schemes are regulated by The Pensions Regulator. Your home may be repossessed if you do not keep up repayments on your mortgage or other loans secured on it. Assist employees with the extra costs of working at home Employers can pay £6 per week (£26 per month) free of tax and NIC to employees who regularly work at home. There needs to be a formal arrangement with the employer that the employee is required to work at home. The allowance is not available where the employee simply chooses where they work. Help employees meet unexpected bills with small loans You can provide an interest-free, or low interest loan, to your employees to help them pay any personal bills. The loan must be repayable and it is advisable to have a formal loan agreement in place which sets out the repayment terms. As long as the total amount lent by the employer to the employee does not exceed £10,000 at any point in the tax year, there is no taxable benefit for the employee Provide free transport to help employees get to work Where your employees are finding it difficult to afford to travel to work, you can lay on a works bus so they can travel to work for free. The vehicle used must seat at least nine passengers. There is no taxable benefit for the employees as long as the bus is used mainly by your employees and their children. Provide your employees with an annual health check and eye test The health check is free of tax. Medical treatment paid for by an employer is generally a taxable benefit. However, there is an annual exemption of up to £500 where you fund medical treatment that will assist an employee’s return to work from sickness or injury. The eye test is also tax free if the employee needs to use a computer screen or similar display screen as part of their job. Any special corrective lenses required to use that equipment can also be provided tax free. Supply your employees with one tax-free mobile phone each Employer-provided mobile phones are tax free, as long as it is the employer rather than the employee who owns the phone and takes out the contract with the telecoms company. Encourage your employees to cycle to work with a subsidised bicycle You can lend bicycles and associated safety equipment to employees to use to commute to work and for any other private journeys. The bicycle and safety equipment can be provided instead of a portion of pay under a salary sacrifice scheme. The employee can be invited to buy the bicycle at a significant discount at the end of the loan period, and there is no limit on the value of the bicycle that can be provided. Provide a nursery or crèche for employees’ children A workplace nursery can be a very valuable benefit for working parents, and it’s tax free for the employee if qualifying conditions are met. The employer must be responsible for the Tip Where an employer has not paid the home working allowance to an employee who regularly works from home see above, the employee can claim £6 per week as a tax deduction in their tax return or as a standalone claim from HMRC. Claims can be made up to four years after the end of the tax year. EXAMPLE Brian is the director of his own company, BVC Ltd. He has an interest in botany. BVC Ltd occasionally provides Brian with books and equipment relating to his hobby. As long as each item does not cost more than £50, and the total value of the gifts BVC Ltd makes to Brian in any tax year do not exceed £300, there is no taxable benefit for Brian.
Chartered Accountants | Godalming 01483 399499 edwardsgreene.com Partners Richard Edwards FCA FCCA CTA Sarah Davy TEP FTT
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