Were your employees required to minimise use of public transport during the pandemic as a result of Government guidance? Have you paid for any ‘home to work’ travel expenses, such as a taxi or other private travel, for your employees as a result?
The payment of ordinary commuting costs for your employees is a taxable benefit in kind, irrespective of the Government directive to minimise use of public transport. Ordinarily this would be taxable on your employee, but HMRC have introduced a concession to enable employers to settle the tax due on behalf of the employee via a PAYE Settlement Agreement (PSA). This is obviously more costly for your business but does not result in unexpected tax liabilities for your employees.
There have been numerous challenges to this treatment by professional bodies throughout the last year, particularly from within the care sector, lobbying HMRC over these punitive and unexpected tax consequences on businesses struggling to recover from the pandemic.
The Government have provided grants for infection prevention and control to many businesses within this sector which can be used against the costs of such measures.
As a result of the grants available and HMRC’s recent update to their guidance relating to the specific tax treatment of travel expenses during the pandemic (dated March 2021) in accordance with the above, suggests that HMRC do not intend on relaxing these rules any further.
If you have incurred any travel costs, and do not wish for your employees to incur the resulting tax charges via their P11D, please get in touch with our Employment Taxes Team who will be able to set up a PSA and calculate the tax charge. Please note that for any costs incurred in the 2020/21 tax year, your PSA must be notified to HMRC and calculated by 5 July 2021. The tax payable is due by 22 October 2021.