Exam: Employee Benefits

Front 1

How is living accommodation dealt with?

Back 1

The basic taxable benefit is equal to the "annual value" of the property. If the employer rents the property as opposed to owning it, the taxable benefit is the higher of the annual value or the rent value paid by employer. Less any employee contribution.

Front 2

What if the Living Accommodation is classed as expensive?

Back 2

Living accommodation is classed as expensive if it is greater than £75,000.
The increase in the taxable benefit is calculated as (Cost – £75,000) multiplied by the "official rate of interest" at the start of the tax year

Cost applies to any improvements made prior to the tax year.

Front 3

What is an Ancillary service, and how are they dealt with?

Back 3

Ancillary service are heating, lighting repairs, maintenance, cleaning and furniture provided. This is taxed at 20% of the benefit.

If accommodation is job related than the benefit is 10% of net earnings, less any contributions.

Front 4

Tax treatment of Loaned assets?

Back 4

Employee taxed annually at 20% on the market value of asset on the date of the loan. If the asset is sold or given to the employee they are additionally taxed on the greater of:

a. Market Value or the asset when sold - contribution from employee.
b. market value - any amount already assessed to tax - amount paid for asset.

Front 5

Cars provided for private use? (EB)

Back 5

Taxable benefit = list price of new car - contributions by employee (maximum of 5k) * the applicable %.

The % are 5% if the cars emissions are less than 75g/km. 76-94g/km - 10%, 95g/km - 11% and a 1% increase for every 5g/km over.

However the maximum charge is 35%. and the percentages are increase by 3% for diesel cars.

Front 6

What is the fuel benefit? (EB)

Back 6

same percentages used as cars for private use. however percentage applied to a fixed amount which is £21,100. Not applicable if employee reimburses 100% of the cost, has to be 100%.