The following Employment Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
Expenses can affect a range of taxes including corporate tax, business income tax and VAT. As HMRC is likely to review expenses for multiple taxes, it is useful to highlight the main issues where other taxes may interact with employment-related expenses.
The general rule for a business to make a deduction for tax (be that corporate or business income tax) requires four criteria to be met. The expense must be:
incurred for the purposes of the trade
wholly and exclusively incurred
revenue and not capital in nature
For a detailed consideration of these rules, refer to the Adjustment of profits ― overview guidance note.
For all taxes, receipts should be obtained and kept as
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The basic rule is that all benefits provided to an employee by reason of their employment are taxable unless there is a specific exemption or other rule that means they are not chargeable to tax.ExemptionsThe main exemptions for employee benefits are in ITEPA 2003, ss 227–326B (Pt 4).Below is an
Many people work from home either on an informal or a full-time basis. These people can be employed or self-employed, and their employment status affects the expenses they can claim as a deduction from their earnings.When dealing with someone working from home, it is important to remind him that
Why is this important?Tax-free amountEach individual, whether or not they are resident in the UK, is entitled to an annual exempt amount when calculating the taxable amount of their chargeable gains for the tax year (although see the exceptions below). The annual exempt amount is also known as the
Class 1 and Class 1AClass 1 and Class 1A are the categories of NIC that can be charged on expenses reimbursed and benefits provided to employees. These classes are mutually exclusive. A benefit cannot be subject to both Class 1 and Class 1A NIC. Three requirements must be met before Class 1A NIC is
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