Tax issues on expenses for permanent staff..

[teeceeee]

Hi all, I'm a permie employee with an IT consultancy company.

We have just become aware of the tax ruling that if on site for 2 years, then even as a permie this is then classed as our permanent place of work and any expenses ( hotels, fuel etc ) are taxable.

The company have proposed that they will then pay our expenses for staff affected by this and so this gets around the problem for folks who have been on site for 2 years or more.

However, there is a thought that if a new starter starts on the project, knowing that their placement will be in excess of 2 years - the rule kicks in straight away and their expenses are taxable.

Or, if someone has been on site a year, but their SOW is then extended for another 18 months, the same applies.


Could anyone clarify please whether it is the 2 year on site, or 'knowing' that you will be on site for over 2 years that triggers the ruling?


hope it's a clear question?!?!?

[Troubleatmill]

Think about it.

Sodexho - The catering giant that must serve up 2-4 million meals a day. Has staff scattered all around the UK in companies doing the catering.
Ditto for G4S and anything else that is outsourced.

There are millions of people working for one company - located at another companies premises.



My understanding was that if you were a contractor/ self employed/ manpower agent etc etc - then the 2 year thing is relevant.
But you are already a permanent employee.

The principle is to ensure HMRC get's PAYE and NI contributions.

If you were an independent IT contractor - I can see the 2 year things being an issue.

[LukePaterson84]

If you know that said person is going to be on site for 2+ years, the rule is automatically triggered regardless.

[teeceeee]

Troubleatmill said:

Think about it.

Sodexho - The catering giant that must serve up 2-4 million meals a day. Has staff scattered all around the UK in companies doing the catering.
Ditto for G4S and anything else that is outsourced.

There are millions of people working for one company - located at another companies premises.



My understanding was that if you were a contractor/ self employed/ manpower agent etc etc - then the 2 year thing is relevant.
But you are already a permanent employee.

The principle is to ensure HMRC get's PAYE and NI contributions.

If you were an independent IT contractor - I can see the 2 year things being an issue.

But they are able to swap folks around to different sites.

i can 100% assure you that it is relevant as one guy here has been issued with a tax bill against his expenses after being here on site for three years.

Even as a permie, the rules applied are that it becomes your permanent place of work and as such expenses are taxable.

[teeceeee]

LukePaterson84 said:

If you know that said person is going to be on site for 2+ years, the rule is automatically triggered regardless.

thanks, knew it was that rule in the US...

so, will chase HR on it, thnaks...

[mfmman]

Troubleatmill said:

Think about it.

Sodexho - The catering giant that must serve up 2-4 million meals a day. Has staff scattered all around the UK in companies doing the catering.
Ditto for G4S and anything else that is outsourced.

There are millions of people working for one company - located at another companies premises.



My understanding was that if you were a contractor/ self employed/ manpower agent etc etc - then the 2 year thing is relevant.
But you are already a permanent employee.

The principle is to ensure HMRC get's PAYE and NI contributions.

If you were an independent IT contractor - I can see the 2 year things being an issue.

Sodexo (no 'h' now) like all FM type companies, employ their customer site based staff on a contract of employment with their place of work as the customers site, no expenses claim allowed or expected just as if the staff were employed directly by the customer. If that person then travels to other customer or even company sites then expenses would be allowable.

The 'two year' rule would apply to a permanent employee as well if travelling to another work location for two years - and from the beginning if planned for more than two years, any expenses then taxable

[mph1977]

mfmman said:

Sodexo (no 'h' now) like all FM type companies, employ their customer site based staff on a contract of employment with their place of work as the customers site, no expenses claim allowed or expected just as if the staff were employed directly by the customer. If that person then travels to other customer or even company sites then expenses would be allowable.

The 'two year' rule would apply to a permanent employee as well if travelling to another work location for two years - and from the beginning if planned for more than two years, any expenses then taxable

that's my understanding ,


it also wouldn't allow a business with 2 sites, say in Birmingham and Leeds to move a leeds based person to the birmingham Office but assert they were Leeds based and then pay milege and expenses based on this .

being a 'contractor' isn't the panacea many assume it to be , if you are based at an other firm but it;s a permanent / ongoing tasking then that is your 'place of work'

[jkh112]

teeceeee said:

The company have proposed that they will then pay our expenses for staff affected by this and so this gets around the problem for folks who have been on site for 2 years or more.

As others have said the tax liability applies as soon as it is known the employee will be on site for 2 years or more.

But be careful about your employers suggestion to pay your expenses to get round the problem. It makes no difference whether you pay the expenses and claim them back or they are paid directly by your employer. HMRC can still see this as a taxable benefit. For my employees who are liable for this I make an adjustment to salary to cover their additional tax liability even though most of these expenses are paid directly by the company and the employee does not have to pay them and then claim back. Remember it is the employee who will incur the tax liability not the employer,

[Countdown]

jkh112 said:

teeceeee said:

The company have proposed that they will then pay our expenses for staff affected by this and so this gets around the problem for folks who have been on site for 2 years or more.

As others have said the tax liability applies as soon as it is known the employee will be on site for 2 years or more.

But be careful about your employers suggestion to pay your expenses to get round the problem. It makes no difference whether you pay the expenses and claim them back or they are paid directly by your employer. HMRC can still see this as a taxable benefit. For my employees who are liable for this I make an adjustment to salary to cover their additional tax liability even though most of these expenses are paid directly by the company and the employee does not have to pay them and then claim back. Remember it is the employee who will incur the tax liability not the employer,

I think TeeCee meant that his Employer will pay any TAX liability arising for staff who had been seconded for > 2 years

[teeceeee]

Countdown said:

I think TeeCee meant that his Employer will pay any TAX liability arising for staff who had been seconded for > 2 years

yes i did...

so if my expenses were 600 and im a 40% tax payer.

then 1000 would hit payroll, leaving me the correct amount and the tax liabilities also being sorted.

of course we now are thinking about staff who may pushed over the limit for other items such as child benefeit.. they could be now in a position where they lose it due to 'earnings'... and all sorts of other issues im sure we have not thought of!

[Countdown]

One option would be for your employer to enter into a PAYE Settlement agreement with HMRC. That's where the employer calculates the tax liability from any perks and pays TaxMan direct. Saved the hassle of putting it through Payroll. The company I currently work for does lots of staff entertaining (I.e jollies, away days, conferences ,) and we pay tax on most of them just to be on the safe side .