Highlights from the broader tax news week ending 24 March, which includes: new support on the tax treatment of paying employee transport costs due to COVID-19, an error in CWG5 and a reminder of self-assessment payment deadline.
Paying employee transport costs due to COVID
HMRC has updated its guidance on how to treat certain expenses and benefits to employees during COVID-19, to include information on paying or refunding transport costs. The guidance confirms that providing transport between work and an employee’s home is a benefit in kind, while reimbursing costs for such journeys is treated as earnings. The guidance outlines potential exemptions and confirms that exempt journeys cannot exceed 60 in a tax year. Read the guidance in full.
HMRC reminder about self assessment payment plan deadline
Taxpayers need to file their 2019/20 self assessment return by the end of March and either pay their tax or arrange for time to pay (TTP) to avoid a 5% late-payment penalty which applies this year on 1 April. The late payment penalty is in addition to any late payment interest which applies from the payment deadline of 31 January 2021. Find out more.
Assets gifted to an employee as part of termination of employment – error in CWG5
Following the introduction of class 1A national insurance contributions (NIC) in real time on termination payments over £30,000 from 6 April 2020, any NIC liability on assets gifted would be class 1A NIC collected in real time. Unfortunately, HMRC’s guidance on class 1A NIC on benefits in kind, termination payments and sporting testimonial payments (known as CWG5), incorrectly states that class 1 NIC is due on assets gifted on termination of employment. However, the example in the guidance correctly refers to Class 1A NIC.
ICAEW Know-How from the Tax Faculty
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