Directors Benefits

Directors Benefits

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Recently took on a client whose work requires him to stay away from home while he is on a contract. Due to the location where he works it is cheaper for him to rent a property and buy food, etc  rather than stay in a hotel. He has been claiming a scale charge of £85 per day for this. HMRC state that this should be reported as a benefit in kind. Our understanding of the situation is that he is on temporary contracts so there should not be a benefit. Has anyone come across this as we would be glad to hear of your experiences.

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By Steve Kesby
14th Sep 2012 10:53

If you're paying a flat-rate...

... then it's actually taxable as pay.  The director should then be able to claim the actual costs as travel and subsistence expenses, if it's a temporary workplace, but both the director and the company will pay NIC on it.

If you don't want the aggravation and want to save the NIC, then you need to do it properly and reimburse actual expenses and apply for a dispensation.

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By Chris Smail
14th Sep 2012 11:08

Agreed, there is no such scale charge

Claim actuals

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By tonycourt
14th Sep 2012 11:25

I read it that the OP's client's......

....employer sets a scale rate. And as Steve says this should be subject to PAYE tax and NI.

I would add that if the client doesn't want to be out pocket temporarily his employer can advance up to £1,000 (tax and NI-free) and then the employee's claims for actual travel and subsistence set against this.

PS HMRC tax and NI-free scale rates do exist for overseas accommodation and subsistence.

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By JWB
24th Sep 2012 13:33

scale rates

How do I find out what these scale rates are please?

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Replying to I'msorryIhaven'taclue:
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By tonycourt
24th Sep 2012 13:52

HMRC link

 

You'll find them here:

http://www.hmrc.gov.uk/employers/wwsr-bench.pdf

TC

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