COVID-19 has us all anxious and 2020 seems to be a stressful year, not just in terms of our physical health, but when it comes to our financial health too. With work from home becoming the norm, the United Kingdom has seen a lot of changes and new regulations in the professional world. In this article, we talk about all the expenses employers can reimburse during the ongoing pandemic.
In case your employees work at a permanent place, and you provide their living accommodation due to COVID-19, the resulting cost will be taxable. That said, if an exemption applies to this norm, there shall be no tax. In case your employees work at a temporary place for under two years, they can avail of some tax relief. In this case, you will be required to report the total cost of accommodation that you are providing on a P11D as normal.
In case one or more of your employees cannot go back to their homes due to the ongoing pandemic, you are entitled to reimburse their lodging expenses and subsistence expenses. This includes hotel stays. All these expenses are taxable, and you can report them via a PAYE Settlement Agreement.
Mileage Costs & Volunteer Fuel
If your employees are engaged in any volunteer work, you can support it by agreeing to refund the fuel costs and fund their volunteer mileage costs.
Employees Who Use Company Cars
With the help of the Advisory Fuel Rates, you can refund the fuel costs of all your employees who are currently carrying out volunteer activities due to COVID-19. This includes delivering all kinds of medical supplies and other volunteer work. It is noteworthy that these refunds are advantageous and you can settle all NI contributions as well as taxes on behalf of your employees, simply by reporting it via a PAYE settlement agreement. In the same vein, it is also possible for you to fund the total fuel cost for all volunteer mileage that arises due to coronavirus. Moreover, all NI contributions and tax must be reported via a PAYE settlement agreement, as mentioned above.
Refunding Or Paying The Costs Of Transportation
In case you refund or pay the transportation costs of your employees when they work from home, it can be a benefit for you. This is because all commutes between an employee’s home and workplace are considered to be private journeys. There is an exemption in some cases where you can save tax on this particular benefit. To make that happen, you must meet the following four conditions:
- An employee must work at the office later than usual (at least until 9 pm)
- It happens irregularly
- The public transport stops, or you cannot reasonably expect them to make use of public transport by the time they finish the work
- Their usual commute is by a cab or other similar mode of road transportation
Your employees can travel to work regularly in a cab with other employees by carpool. In case there is a deterrent in this arrangement due to exceptional and unforeseen circumstances related to COVID-19, the cost of providing reimbursement or transport to your employees to and from the workplace may also be exempt.
Furthermore, the total exempt journeys must not exceed the number of 60 in a fiscal year. This limit applies to all failures in the carpool arrangement and late-night journeys. In case these requirements remain unmet, subsidised or free transport is taxable, and you will be required to report it via a PAYE settlement agreement stating it as a benefit related to coronavirus.
Subsistence Expenses & Paying Travel For Employees Who Travel To Temporary Places Of Work
If one or more of your employees were granted a leave of absence when they traveled to a temporary place of work, the furlough period is inclusive of the continuous work period. In addition to that, the period an employee works from home will also be an integral part of the continuous work period. It is also pertinent to note here that NI contributions, as well as the tax, will become liable on all subsistence expenses and payment travels.
Subsidised Or Free Meals
In case you offer your employees subsidised or free meals at a workplace canteen of reasonable value, you need not pay NI or tax or report anything to HMRC. This also includes any vouchers you issue that cover the buying costs of these meals. Unexempt subsidised, or free meals include:
- Elaborate meals that happen on a large scale with fine wines
- Meals that are only for select people and not for all staff members
- Meals that are provided at a restaurant or other off-site locations
- Provided under flexible benefit plans or flexible remuneration arrangements
Many more norms have come into force because of the ongoing pandemic. If you need help understanding these reimbursable expenses during COVID-19, get in touch with us at CloudCo Accountancy Group!