Nullifying possible benefits in kind liability
Question from somebody running a small company, but who is not an accountant...
If an employee has a liability to additional income tax arising from the provision of fringe benefits by the company to the employee (e.g. something like the cost of membership of a local health club for example, or private medical insurance), can the employee nullify that liability by repaying the cost of the benefit to the company in full out of their normal taxed income (in the same tax year as the potential liability arises)?
Logic would seem to dictate that if the employee has paid back to the company what it (the Company) paid for the fringe benefit, then the employee has had no benefit, therefore no benefit-in-kind tax for the employee or additional NI liability on the company would arise. Would you agree?
By extension, therefore, there would be nothing for the company to have to declare on a P11D for the employee at the end of the tax year? (PS - the employee is otherwise paid at a basic salary below the rate of £8,500 per annum).
Also, what about VAT? If the cost of the fringe benefit purchased by the company carried VAT, and this has already been claimed back by the company, is what the employee has to pay back to the company to nullify the benefit being a benefit-in-kind taxable liability the cost to the company with or without the VAT it paid and has claimed back?
I would be very pleased if somebody out there could throw some light onto this little conumdrum...
- Redoing accounts for mortgage lender 70 1
- Sage valuing foreign bank balances 325 9
- Unfair charges for self assessment tax returns. Any recourse? 192 5
- 27,000 Really? 1,170 38
- What are options for non CA firm 2,847 60
- Legal title not in the company name 804 23
- Why would they want his purchase invoices?? 358 4
- Opening Balances 214 2
- Awkward insolvency practitioner 596 7
- Tax Credits for Self Employed 135 1
- FRS12 Redundancy and notice period provision 106 1
- This is getting boring 629 12
- Using profits from Ltd company as start up funds for new venture 272 7
- pension paid by company? 131 3
- inheritance tax 434 12
- pretty multi rainbow -coloured client spreadsheets 356 9
- Sage 50 re-key - VAT problem 233 4
- State pension 306 3
- Accountancy Career 152 1
- CIC Company 661 13
- Property exchange - 8-year legal delay following fall-out 642
- Cancelled 396
- SAGE Payroll Data for Import to MS Dynamics AX 355
- Cancelled 340
- Have you staged yet for auto enrolment? 311
- Probiz 306
- Free-standing washing machine - unfurnished lettings 282
- How not to compose an email 274
- VAT on non-profit making clubs (ECJ VS West Dorset Golf Club) 259
- Phishing emails purporting to be from CIPFA? 224