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  • Tax - Employee travel expenses policy
    Employee travel expenses policySince 6 April 2016 responsibility for determining whether business expenses reimbursed to employees and directors are exempt of tax and NI rests with the employer. Therefore, it's good practice to have a travel expenses policy in place. Business travelIncluding an Employee Travel Expenses Policy in your staff handbook will provide evidence to HMRC that you only reimburse qualifying travel expenses. Our policy makes reference to home-to-office travel, which should not be included...
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  • Tax - Checklist of employment status factors
    Checklist of employment status factorsIf HMRC decides that an individual contractor should have been treated as your employee, it will ask you to pay the tax and NI that should have beendeducted from their pay through PAYE, plus the employers' NI.  Therefore, it's important to have documentation on file to show why you treated the worker as self-employed.Employed or self-employed?You're not free to choose the status of individuals who work for you. HMRC aggressively challenges the status of self-employed workers...
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  • Tax - Employee equipment allowance
    Employee equipment allowanceWhere your employees use personally owned or rented equipment for work, you can reimburse them the business element of their costs tax and NI free. Quantifying the amount you can pay without having to apply PAYE can be tricky, especially where there is personal and business use of the equipment.When to use this document When you make a contribution to the costs incurred by an employee in providing equipment for use in their job they can use our document to help them calculate a reasonable...
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  • Tax - Employee expenses claim form
    Employee expenses claim formWhere an employee or director claims expenses from your business you should ask them to provide details for your accounting and tax records. The need to keep recordsEach employee who claims business expenses over the year should keep all their receipts which match the figures entered on the Employee Expenses Claim Form. The procedures for submitting and authorising expense claims should be well documented and communicated to employees
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  • Tax - Consultancy agreement
    Consultancy agreementIf you're a one-man service company, then you could be caught by IR35 if HMRC deems the contract between you and the client as one of employment rather than self-employment. Having a consultancy agreement in place can provide evidence that IR35 should not apply.One-man service companiesClients will often only deal with freelancers who operate through limited companies. This is because it will be the freelancer's limited company, not the client, who will be liable to any PAYE or NI (under...
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  • Tax - Golden hello payment letter
    Golden hello payment letterAn inducement payment will sometimes be made to a new employee. Such a payment will normally be taxable. Exceptionally, it may be tax-free if you can demonstrate that the payment is not by reason of the employment. How can you establish this?Lump sum paymentA "golden hello" is a popular term for a lump sum payment received on the taking up of employment. Normally, tax is due on these payments as if they were salary. However, if the payment is an inducement rather than a reward for...
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  • Tax - Employee expenses policy
    Employee expenses policyFrom 6 April 2016 responsibility for determining whether business expenses reimbursed to employees and directors are exempt of tax and NI rests with the employer. To aid with this it's good practice to have an expenses policy in place. Evidence of a legitimate claimHMRC wants to know that you have a good system in place to ensure that only expenses which are reimbursed for genuine business reasons are paid tax and NI free. Our policy covers all the rules and requirements for legitimate...
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  • Tax - Employee homeworking expenses policy
    Employee homeworking expenses policyThe increasing tendency for individuals to work from home raises the question of which home-related costs can be reimbursed tax free by an employer. So you'll need a company policy making it clear to your employees which expenses come with a tax bill. Working from homeThere has been a very large increase in the number of employees who work from home. A question often asked by employers is how the additional expenses the employee will incur as a result of working from home...
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  • Tax - Contract for services
    Contract for servicesHMRC's aim is to reclassify freelancers such as consultants as employees and insist that PAYE and NI is due on the total amount paid to them. Having a realistic contract for services in place will provide evidence that the engagement is one of self-employment.Contracts for servicesContracts for services need to be distinguished from contracts of service (i.e. of employment). Under a Contract for Services you can only order what is to be done, while in the case of an employee under a contract...
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  • Tax - Exchange of letters
    Exchange of lettersDuring routine compliance visits HMRC has asked companies for the names and addresses of any freelancers they use. Protect yourself with an exchange of letters between your company and the freelancer.Proving you've considered statusHMRC would be delighted to be able to reclassify your consultants/freelancers as your employees, as it could then insist that PAYE and NI is due on the total amount paid to them. One way to prevent this problem is to implement an Exchange of Letters with the freelancer...
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