If a business takes on a worker on a self-employed basis (assume all/ most conditions determining self-employment are met) and then provides a number of benefits e.g. provides a motor vehicle to him/her, pays a pension contribution for him/her and provides free living accommodation to him/her, are some or all or none of these benefits taxable in the hands of that self-employed worker? Assume that the total remuneration including benefits is < £8,500 pa.
Is it correct that no P11D or P9D would be required from the business because the worker was self-employed?
The follow-on question would have to be whether the self-employed worker, while satisfying all the other conditions determining self-employed status, could still be classified as self-employed after receiving benefits such as these?
Replies (11)
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Not my field but
I'd have thought that these benefits were part of the consideration for services endered and thus should have a fair value put on them and be taxable in the hands of the s/e person, and possibly Turnover for VAT measurement.
SE status looks dubious in any case let alone after these benefits.
I'll wait for a more expert view - this looks interesting.
Self employed benefits
This is interesting. Whilst I don't have a definitive answer, one thing to do would be to look at the contract between the parties. What does it say about payment. If a price is stated, and paid, and benefits paid on top I believe that you may have a real problem.
If the benefits are included in the total value paid under the contract, then it seems to me a simple case of satisfaction for work done being paid in an alternative method to direct cash. The VAT position would need to be checked as would the correct value for the provisionn of the vehicle.
I think you need some more information to determine exactly what is happening before you can reach a conclusion.
Pot Pouri
I know the OP wants to ignore the employment status, but you can't. The P11D rules only apply to employees so you can't use them for a s/e contractor. Yet the provision of these benefits (and I think the pension is the killer) very firmly point you in the direction of employed status. Provision of a vehicle is not unheard of for an s/e contractor, neither is the accomodation but the whole package is much more akin to an employee.
Not tricky at all
If you are convinced that there is no employment status issue then the answer is that these benefits are barter and form part of the consideration for the work done by the contractor. They should be valued at open market value and treated as income in the hands of the contractor. They are not expenses in employment so the BIK rules for valuation don't apply. If appropriate, they also will attract VAT on their value.
Low paid employees do get taxed -
That's what the P9D is for.
The £8,500 threshold doesn't only include wages or salary that you pay the employee. You must also include the value of the expenses and benefits they receive from you
These benefits for an employe would probably move them to P11D anyway.
I'd value the accomodation at cost - available from employer
Pension, if paid to a company COMP, GPP or DC/DB scheme probably OK. If paid to your clients specific account it may actually count as pay.
Car- running costs from employer and if leased I'd use these payments, if paid for that cost would be a one off payment.
Low paid
Yep,how long has it been since £8,500 was a high salary. Even when i was a boy accountant nearly 25 years ago this was a joke.