TAXABLE BENEFITS, TAX AND THE SELF-EMPLOYED

TAXABLE BENEFITS

There are a number of employee benefits offered by companies that are taxable on the employee as a benefit in kind. These include:

§  private medical insurance;

§  payments for expenses that have not been wholly, exclusively and necessarily incurred in the performance of relevant duties of the employee;

§  payment of telephone rental charges and private telephone calls;

§  the cost of luncheon vouchers above 15 pence per day.

We emphasize that the basic principles of benefit taxation are not clear cut and that it is always advisable to get a ruling from the Inland Revenue on any specific new benefit under consideration. In addition, it is important to ensure that employees are fully aware of the tax liabilities on their benefits in kind.

 

TAX AND THE SELF-EMPLOYED

The income tax position for individuals depends largely on whether they are employees and their income is taxable as employment income or whether they are taxable under Schedule D. (Some employees, eg professionals who teach and write for fees but have either a full- or a part-time contract, may be both.) It is now very difficult to have a contract with a 'self-employed person' if he or she works more or less full time for one 'client'. There are a number of tax cases that have debated this point. However, the basis of being self-employed is generally dependent upon a number of factors. Guidance is available from the Inland Revenue to help decide whether an individual is an employee or is self-employed.