You might be affected if any of your employees are working from home because of coronavirus either because your workplace has closed or your employee is following advice to self-isolate.
Furloughed workers who are eligible for the Coronavirus Job Retention Scheme are not affected.
Mobile phone and broadband
If you provide a mobile phone and SIM card without a restriction on private use, limited to one per employee, this is non-taxable.
If your employee already pays for broadband, then no additional expenses can be claimed.
If a broadband internet connection is needed to work from home and was not already available, then the broadband fee can be reimbursed by you as the employer and is non-taxable.
In this case, the broadband is provided for business and any private use must be limited.
Laptops, tablets, computers, and office supplies
If these are mainly used for business purposes and not significant private use, these are non-taxable.
Reimbursing expenses for office equipment your employee has bought
If your employee needs to buy home office equipment to allow them to work from home, they should discuss this with you in advance.
If you reimburse your employee the actual costs of the purchase, then this is non-taxable provided there is no significant private use.
If you do not reimburse your employee, they can claim tax relief for these purchases on their tax return or P87 provided the amount claimed is incurred wholly, exclusively and necessarily in the performance of their duties of employment.
Your employees will need to keep records of their purchases and claim for the exact amount.
Additional expenses such as electricity, heating or broadband
Payment or reimbursement to your employees of up to £6 a week is non-taxable for the additional household expenses incurred when your employee is working from home.
Employer provided loans
A salary advance or loan to help your employee at a time of hardship counts as an employment-related loan. Loans provided with a value of less than £10,000 in a tax year are non-taxable.
Should your employee needs to self-isolate but cannot do so in their own home, you can reimburse hotel expenses and subsistence costs, these are taxable.
Employees using their own vehicle for business
You can pay approved mileage allowance payments of 45p per mile up to 10,000 miles (25p per mile thereafter) free of tax and National Insurance contributions.
If you do not pay mileage allowance, your employee can claim tax relief through their Personal Tax Account.
What’s the tax treatment when my employee returns office equipment?
If you have supplied employees with office equipment so they can work from home, there’s no tax charge when they return the equipment to you, so long as there’s no transfer of ownership.
If you do transfer ownership of the equipment to an employee, at any time, this will become an employee benefit. The charge will be on the market value of the equipment at the time of the transfer, minus any amount the employee may have paid towards the equipment.
If equipment has been reimbursed by you as the employer, the situation is different. Your employee may have agreed to buy their own home office equipment for use whilst working at home and you have reimbursed the exact expense. Unless you have specified that they must transfer ownership to you, the equipment is owned by your employee.
There is no benefit charge on the reimbursement. There is also no benefit charge if you let your employee keep the equipment as it is something that they already own.
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