Budget 2007

Benefits in Kind

For directors, and employees earning at the rate of £8,500 or more per tax year including expense payments and benefits

Cars and fuel

• Benefit based on list price (including accessories)¹ for a car and £14,400 for fuel.
  
• Set percentage, percentage in most cases between 15% and 35%, determined by carbon dioxide emissions for car in grams per kilometre (g/km)
  
• Emissions not exceeding 140g/km
  (135g/km 2008/2009 onwards)15%
  • increase for each whole 5g/km 1%
  • supplement for cars running solely on diesel² 3%
  • maximum percentage 35%
• Special rules for alternative and mixed fuel cars, classic cars, automatic cars for disabled drivers, cars without a carbon dioxide emissions figure and those registered pre 1 January 1998.
• Car benefit reduction available for capital (maximum £5,000) and private use contributions.
• Benefit reduced if car or fuel not available for whole year subject to fuel anti-avoidance provisions.
• No fuel benefit if employee required to pay for and actually pays for all private fuel or if fuel is only provided for business journeys.
  

¹ Maximum price £80,000 after deducting any allowable capital contributions.
² Excludes Euro IV diesels registered before 1 January 2006.

Vans

³ At the end of the tax year
⁴ Per van – reduced by private use contribution and where the van is unavailable or shared.
⁵ Nil if private use restricted to home to work travel.
⁶ Unless used wholly or mainly for private purposes.
⁷ No fuel benefit if employee required to pay for and actually pays for all private fuel or if fuel is only provided for business journeys.

Cheap loans

• Benefit equivalent to excess of official rate⁸ over interest charged
• Exempt if loans total no more than £5,000

⁸ 5% for 2006/2007 but subject to confirmation for 2007/2008 (different rates may apply to foreign currency loans).

Key Reliefs for All Employees

Childcare

• No income tax liability for:
  • employer provided nurseries
  • up to £55 per week for childcare vouchers per week or directly contracted childcare.

Green transport

• No income tax liability on
  • works’ buses or minibuses, or subsidies to public bus services.
  • loan of cycles and cycling safety equipment used mainly for qualifying journeys including home to workplace travel.

Incidental costs of homeworking

• No income tax liability for reasonable additional household expenses incurred in carrying out duties at home
• Claims over £2 per week require documentary evidence

Incidental overnight expenses

• Payments to employees on qualifying trips:
  • no income tax liability if employer pays up to £5 per night for UK trips or £10 per night for trips partly or wholly overseas
  • taxable in full if limit per trip exceeded.

Long service awards

• No income tax liability for non-cash gifts (subject to exceptions):
  • to mark at least 20 years service with same employer
  • up to £50 per year of service in respect of which award is made.

Mobile phones

• No liability to income tax for loan of mobile phones to employees subject to limit of one phone per employee.

Parking provision and expenses

• No income tax liability for the provision of workplace parking:
  • includes space for car, van, motorcycle or cycle.
  • within reasonable distance of workplace.

Relocation expenses

• Removal benefits and payment or reimbursement of removal expenses in connection with an employee’s change of residence exempt up to £8,000. Detailed rules apply⁹

Annual Staff parties

• No income tax liability on cost of party if VAT inclusive amount, aggregated if more than one, does not exceed £150 per head per annum

⁹Detailed rules apply

The figures shown here are subject to ammendment as the Finance Bill passes through Parliament.

This information has been prepared only as a topical guide to tax and personal financial matters. No responsibility can be accepted by us for loss occasioned to any person acting or refraining from acting as a result of any material contained in this publication.