EXPENSES - 07.07.2020

More news on homeworking expenses

Home equipment. We recently told you about a new tax and NI exemption which applies where employers reimburse an employee the cost of equipment, e.g. a computer, so that they can work at home if they need to because of coronavirus ( yr.20, iss.17, pg.1 , see The next step ). HMRC has now published further guidance which adds an interesting spin to the exemption.

Yours to keep. Based on HMRC guidance our assumption was that where an employer paid for the equipment by reimbursement they would own it. However, HMRC now says that the exemption applies if the employee, or director, retains ownership. In effect the employee gets a tax and NI-free gift.

Ownership. Notwithstanding HMRC’s latest guidance we can’t see why you would want to give the employee ownership. There are good tax reasons for this. Firstly, by taking ownership you can reclaim any VAT paid on the purchase, and secondly you can still allow the employee tax and NI-free use of the equipment after they return to the normal workplace if the reason is to allow them to work from home from time to time.

For a previous article on the new exemption, visit http://tipsandadvice-tax.co.uk/download (TX 20.20.08).

HMRC says that the new tax and NI exemption for when an employer reimburses an employee (or director) the cost of equipment applies even if the employee retains ownership. However, we recommend that employers take ownership so they can recover the VAT.

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