Office accommodation and tools

By Tolley in association with Philip Rutherford
Employment_tax_img

The following Employment Tax guidance note by Tolley in association with Philip Rutherford provides comprehensive and up to date tax information covering:

  • Office accommodation and tools
  • Introduction
  • Equipment and tools at the employer’s premises
  • Supplies other than at the employer’s premises
  • Tool allowance
  • Private use
  • Accommodation at the employer’s premises
  • Supplies other than at the employer’s premises
  • Private use
  • Reporting requirements

Introduction

Most employers provide their employees with the necessary office accommodation, tools and equipment to carry out the duties of their employment. Workplace accommodation is generally exempt from tax. In the majority of cases, whether the tools are provided directly or allowances are given to the employee, there is a general exemption from tax and NIC. There may be reporting requirements if the employee has significant private use.

Equipment and tools at the employer’s premises

There is a general exemption from tax and reporting for equipment and tools provided by an employer to an employee within ITEPA 2003, s 316. The exemption is in place so long as:

  • the tools and equipment are provided at the employer’s premises
  • the employee uses the tools for the duties of his employment and that the private use is not significant

HMRC’s guidance can be found at EIM21610.

Supplies other than at the employer’s premises

The exemption from tax / NIC and reporting extends to the provision of tools beyond the employer’s premises as long as further requirements are met. These include:

  • the tools are for the sole purpose of enabling the employee to carry out his duties
  • any private use is insignificant

HMRC’s guidance is found at EIM21611 onwards.

If employees are provided with tools and they can be used for private use, each case should be examined on its merits. As long as the private use is not significant then no tax charge should arise. Not significant use is not defined but HMRC provides some guidance at EIM21613 that:

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