Reimbursing employer for benefits in kind

Source: HM Revenue & Customs | | 21/09/2017

It has been confirmed that the promised legislation to allow employees to reimburse their employers for benefits provided, and thereby avoiding a tax charge, will be included in the second Finance Bill 2017.

These changes will align the dates for reimbursing an employer for benefits-in-kind (referred to in the legislation as ‘making good’).

Employees will need to make the reimbursement before 6 July following the end of the tax year during which the benefit-in-kind was received in order to avoid a tax charge. Employees will still have the discretion to make good after 6 July but doing so will not reduce the taxable value of the benefit in kind.

Planning note

The change will have effect for making good on a tax liability that would arise in the current 2017-18 tax year and subsequent years.

A beneficial use of this arrangement is where an employee reimburses their employer for the fuel provided for private use of a company car, thus avoiding the expensive fuel benefit charge.

This change may open up planning opportunities for companies and their employees, as any saving in benefits will reduce tax charges for the employees and National Insurance charges for the employer. Please call if you would like to consider these options for your company.



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