In the past few months, HMRC has updated its guidance on a number of employee benefits to cover specific issues created by the COVID-19 lockdown in the UK. Here is a summary of the key points:
Home office equipment
As well as a mobile phone and laptop or tablet, employers have been providing office equipment to allow employees to work from home. As usual, the cost of these is not a benefit in kind provided there is no significant private use. However, where an employee had bought office furniture to use at home, reimbursing the cost was treated as a benefit until a legislative amendment: from 16 March 2020 to 5 April 2021 such costs may be reimbursed without a benefit arising.
While there is no problem for furniture where costs have been reimbursed, when/if employees return to office work, transfer of employer owned furniture to the employee would theoretically create a benefit in kind, although the value of second hand furniture may be minimal.
HMRC is taking a firm line on cars, saying that a benefit in kind continues as they remain available for private use during the COVID-19 lockdown if they are still with the employee (regardless of whether or not the car is actually used). However, during the Coronavirus pandemic, where a hire contract has expired, HMRC will accept that the benefit ceases immediately if the keys are returned to the employer/hire company (at the employer’s instruction) so that it cannot be driven. Where the hire contract has not expired, as under the normal rules, the car benefit will cease 30 days after the keys are returned (ie the car ceases to be available to the employee).
Employer-provided COVID-19 testing for employees
Initially, HMRC stated that where an employer provided COVID-19 testing for employees this would be treated as a benefit in kind for each employee. However, after press comment and ministerial intervention, the guidance was quickly updated to confirm that the costs of such tests would not be treated as a benefit liable to tax and NIC after all: the necessary legislative changes will be put in place to underline this. Similarly, the cost of PPE provided to employees relating to their work is non-taxable.
Travel and subsistence expenses - temporary workplaces
HMRC has advised that if an employee was furloughed when they were travelling to a temporary workplace, the period of furlough is classed as a period of continuous work. A period of working from home will also be classed as a period of continuous work – ie the clock continues to run for the 24 month test.
However, the workplace stops being temporary from the date that attendance there is expected to be more than 24 months. Tax and National Insurance contributions will then become liable on any payments of travel and subsistence expenses.
Enterprise Management Incentives
The Enterprise Management Incentive (EMI) is the most popular tax-advantaged share option plan available in the UK. It offers companies a flexible, tax-efficient and easy to use incentive to help motivate their senior management.
Unsurprisingly, there are a number of conditions to be met to allow individuals to qualify for EMI. Employees (ie not consultants or non-executive directors) are only eligible for EMI options if they work for an average of at least 25 hours a week or, if less, 75% of their working time. This may not have been possible during the COVID-19 lockdown, so the rules have been relaxed for the period 19 March 2020 to 5 April 2021, when the employee is “not being required to work for reasons connected with coronavirus disease”.