Discussion
Hi hoping someone could offer me some advice?
Been offered a new role within a European company but working from home in UK and out/about for a proportion of my time visiting sites/customers. It will be PAYE through a UK subsidiary. All mileage/out of pocket expenses from home as no UK offices.
The package offered includes me paying for office items such as broadband, mobile phone and a call/data contract with me providing receipts and claiming on my monthly expenses (say <£100/month?). Any other office equipment is by agreement and fully reimbursed as is out of pocket expenses monthly. Basically they provide a laptop.
It has been mentioned that these items are annually returned to HMRC on a P11D (minus laptop provided by them).
There is also a car allowance cash amount of £7000/yr paid monthly which I assume I will be taxed on at 40% due to salary being £55k+any bonuses. Mileage rates for business are 45p/25p standard HMRC rates.
My question is whether I am taxed on the office items expensed monthly and car allowance at 40%?
I've not had a P11D for a while so not sure if it can work plus/minus unlike the old days where a company car used P11D's to change tax code out of your favour for benefit in kind amount. I was hoping expenses would just be listed on payslip as non taxable but it doesn't sound that way.
I am kind of accepting the car allowance is 40% tax hence why £7k in the first place.
Many thanks
Been offered a new role within a European company but working from home in UK and out/about for a proportion of my time visiting sites/customers. It will be PAYE through a UK subsidiary. All mileage/out of pocket expenses from home as no UK offices.
The package offered includes me paying for office items such as broadband, mobile phone and a call/data contract with me providing receipts and claiming on my monthly expenses (say <£100/month?). Any other office equipment is by agreement and fully reimbursed as is out of pocket expenses monthly. Basically they provide a laptop.
It has been mentioned that these items are annually returned to HMRC on a P11D (minus laptop provided by them).
There is also a car allowance cash amount of £7000/yr paid monthly which I assume I will be taxed on at 40% due to salary being £55k+any bonuses. Mileage rates for business are 45p/25p standard HMRC rates.
My question is whether I am taxed on the office items expensed monthly and car allowance at 40%?
I've not had a P11D for a while so not sure if it can work plus/minus unlike the old days where a company car used P11D's to change tax code out of your favour for benefit in kind amount. I was hoping expenses would just be listed on payslip as non taxable but it doesn't sound that way.
I am kind of accepting the car allowance is 40% tax hence why £7k in the first place.
Many thanks
I'm in a similar role. I work for a French company but WFH in the UK as we have no UK offices.
I earn a fair bit more but I don't get a car allowance as when I travel to customer sites it's usually by plane and taxi. Rarely, I use my own car, but then claim the 45p/mile expense allowance. I would of course be taxed on a car allowance if I had it, but expenses for office items, broaband, mobile etc. are not taxed those are expenses you've incurred for business purposes and it's paying you back - expenses are not classed as income. Otherwise you would be personally losing out every time you paid for something out of pocket for the company.
I earn a fair bit more but I don't get a car allowance as when I travel to customer sites it's usually by plane and taxi. Rarely, I use my own car, but then claim the 45p/mile expense allowance. I would of course be taxed on a car allowance if I had it, but expenses for office items, broaband, mobile etc. are not taxed those are expenses you've incurred for business purposes and it's paying you back - expenses are not classed as income. Otherwise you would be personally losing out every time you paid for something out of pocket for the company.
Section 316A ITEPA 2003
Can employers can reimburse an employee’s broadband internet charges, tax free, under Section 316A.
The section applies to reasonable additional household expenses. So if an employee who begins to work from home under homeworking arrangements (see EIM01472) is already paying for a broadband internet connection at home, there is no additional expense. The employer cannot, therefore, reimburse the employee’s broadband internet charges, tax free, under Section 316A. Any such payment that the employer may decide to make should be subject to PAYE and NICs.
On the other hand, if the employee does not already pay for a broadband internet connection at home, and needs one in order to work from home under homeworking arrangements, the broadband fee is an additional household expense that the employer can reimburse, tax free, under Section 316A.
Can employers can reimburse an employee’s broadband internet charges, tax free, under Section 316A.
The section applies to reasonable additional household expenses. So if an employee who begins to work from home under homeworking arrangements (see EIM01472) is already paying for a broadband internet connection at home, there is no additional expense. The employer cannot, therefore, reimburse the employee’s broadband internet charges, tax free, under Section 316A. Any such payment that the employer may decide to make should be subject to PAYE and NICs.
On the other hand, if the employee does not already pay for a broadband internet connection at home, and needs one in order to work from home under homeworking arrangements, the broadband fee is an additional household expense that the employer can reimburse, tax free, under Section 316A.
The mobile phone could be tax free, if you have your own personal one, and you use the work one solely for business use. Broadband has been covered by Cueball
The car allowance is deemed to be part of your pay for tax purposes, therefore will be taxed at your marginal rate. At your salary level I would expect your 40% to be correct unless you have a massive variation to your personal allowance.
The car allowance is deemed to be part of your pay for tax purposes, therefore will be taxed at your marginal rate. At your salary level I would expect your 40% to be correct unless you have a massive variation to your personal allowance.
RayDonovan said:
abzmike said:
… and if it’s an EV it’s 7ppm … I was rather surprised to find that’s the rate my employer deems suitable.
Depends really. I get 7p but home charging is less than 2p/mile and it's free at the office. egAs103 said:
Ek thanks all, I will double check mileage rates but 45p/mile for first 10,000 then 25p after has been mentioned but not confirmed in writing.
They are the allowed HMRC rates if using your own car - the firm can pay that much tax free, or they can pay less and you reclaim the tax in the difference. Note if you reclaim you only get the tax back though, not the full amount. So if they pay you 15p you claim the tax back on 30p, ie 12p if 40% tax payer. So you end up with 27p altogether.
It’s possible they might pay both an allowance and the full mileage rate, especially if it’s a foreign firm and someone has pulled the wool over their eyes (that kind of thing happened to us a few times employing people elsewhere in Europe
) but unlikely.Sheepshanks said:
Unusual to get both a chunky car allowance and 45p/mile.
Normally it's car allowance and then petrol money, and you claim the tax back up to 45p.
You can claim £6/wk WFH allowance - either on expenses so you get the full amount, or via tax deduction.
It is not that unusual, an employer may set a slightly reduced allowance amount in the knowledge that you will be expensing at the full HMRC rate, thus saving you a job on your tax return. I have seen more companies giving you the full HMRC rate, than a reduced rate.Normally it's car allowance and then petrol money, and you claim the tax back up to 45p.
You can claim £6/wk WFH allowance - either on expenses so you get the full amount, or via tax deduction.
MustangGT said:
Sheepshanks said:
Unusual to get both a chunky car allowance and 45p/mile.
Normally it's car allowance and then petrol money, and you claim the tax back up to 45p.
You can claim £6/wk WFH allowance - either on expenses so you get the full amount, or via tax deduction.
It is not that unusual, an employer may set a slightly reduced allowance amount in the knowledge that you will be expensing at the full HMRC rate, thus saving you a job on your tax return. I have seen more companies giving you the full HMRC rate, than a reduced rate.Normally it's car allowance and then petrol money, and you claim the tax back up to 45p.
You can claim £6/wk WFH allowance - either on expenses so you get the full amount, or via tax deduction.
Countdown said:
MustangGT said:
Sheepshanks said:
Unusual to get both a chunky car allowance and 45p/mile.
Normally it's car allowance and then petrol money, and you claim the tax back up to 45p.
You can claim £6/wk WFH allowance - either on expenses so you get the full amount, or via tax deduction.
It is not that unusual, an employer may set a slightly reduced allowance amount in the knowledge that you will be expensing at the full HMRC rate, thus saving you a job on your tax return. I have seen more companies giving you the full HMRC rate, than a reduced rate.Normally it's car allowance and then petrol money, and you claim the tax back up to 45p.
You can claim £6/wk WFH allowance - either on expenses so you get the full amount, or via tax deduction.
MustangGT said:
That is a likely scenario.
Glad my memory hasn't completely gone 
In fact one case I remember was a Manager going on mat leave and the car allowance being removed (on the grounds that she wouldnt be using her car). However I think the rules have changed now that you can still get the same perks / allowances even if you're on leave as they are considered contractual.
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