HM Treasury’s United Kingdom Budget 2005

brought to you courtesy of Grant Thornton


brought to you courtesy of Grant ThorntonBenefits in Kind

For directors, and employees earning at the rate of £8,500 or more per tax year including expense payments and benefits

Cars and fuel

  • benefit based on list price* for a car and £14,400 for fuel
  • set percentage determined by carbon dioxide emissions for car in grams per kilometre (g/km)
  • percentage in most cases between 15% and 35%
  • emissions not exceeding lower threshold 15%
    • increase for each 5g/km above lower threshold 1%
    • supplement for cars running solely on diesel 3%
    • maximum percentage 35%
  • special rules for alternative and mixed fuel cars, classic cars, automatic cars for disabled drivers, cars without a carbon dioxide emissions figure and those registered pre 1 January 1998
  • car benefit reduction available for capital (maximum £5,000) and private use contributions
  • benefit reduced if car or fuel not available for whole year subject to fuel anti-avoidance provisions
  • no fuel benefit if employee required to pay for and actually pays for all private fuel or if fuel is only provided for business journeys

* Maximum price £80,000
145g/km 2004/2005, 140g/km 2005/2006 and later years

Vans

Vans
Under 4 years old*
4 years old and over*
 
2005/2006
2004/2005
2005/2006
2004/2005
 
£
£
£
£
up to 3.5 tonnes
500†‡
500†‡
350†‡
350†‡
over 3.5 tonnes
nil§
nil§
nil§
nil§

No separate charge on fuel provided for private motoring (benefit of £500 from 6 April 2007)
From 6 April 2007 single benefit of £3,000 for unrestricted private usage irrespective of age of van

* At the end of the tax year
Per van
Reduced by private use contribution and if the van is unavailable or shared
§ Unless used wholly or mainly for private purposes

Cheap loans

Benefit equivalent to excess of official rate* over interest charged
Exempt if loans total no more than £5,000

* 5% subject to review in the event of significant rate changes (different rates may apply to foreign currency loans)

Reliefs for all employees (not exhaustive)

Computer equipment

Loan of computer equipment to employees tax free

  • no exemption if restricted to directors and senior staff
  • value of computer equipment limited to £2,500 (reduced if related expenditure incurred by employer)

Green transport

No benefit in kind on

  • works’ buses or subsidies to public bus services
  • loan of cycles and cycling safety equipment used mainly for qualifying journeys

Incidental costs of homeworking

  • tax free payment for additional costs of working at home
  • payments over £2 per week require documentary evidence

Incidental overnight expenses

Payments to employees on qualifying trips

  • no benefit if employer pays up to £5 per night for UK trips or £10 per night for overseas trips
  • taxable in full if limit per trip exceeded

Long service awards

  • tax free non-cash gift subject to exceptions
  • after at least 20 years service
  • value of gift limited to £50 per year of service

Relocation expenses

Removal benefits and payment or reimbursement of removal expenses in connection with an employee’s change of residence exempt up to £8,000. Detailed rules apply

Staff parties

Cost of party exempt if VAT inclusive cost, aggregated if more than one, does not exceed £150 per head per annum

The figures shown here are subject to ammendment as the Finance Bill passes through Parliament.

This information has been prepared only as a topical guide to tax and personal financial matters. No responsibility can be accepted by us for loss occasioned to any person acting or refraining from acting as a result of any material contained in this publication.

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