[UK] HMRC Updates Guidance “Check which expenses are taxable if your employee works from home due to coronavirus (COVID-19)” [UK] HMRC Updates Guidance “Check which expenses are taxable if your employee works from home due to coronavirus (COVID-19)”

[UK] HMRC Updates Guidance “Check which expenses are taxable if your employee works from home due to coronavirus (COVID-19)”
15 Jun 2020

As employees are expected to return to the workplace over the coming weeks and months, it is relevant and good timing that HMRC have updated the above guidance.  A new section has been added called “Taxable benefit charge – returning office equipment”.

As well as pointing readers to the guidance, it is worth replicating this guidance in full, remembering we are talking about an employee returning office equipment. 

Equipment provided by the employer 

The employer may have supplied employees with office equipment so they could work from home.

There’s no tax charge when they return the equipment to the employer, so long as there’s no transfer of ownership.

If there is a transfer of ownership of the equipment to the employee, at any time, this will become an employee benefit. The charge will be on the market value of the equipment at the time of the transfer, minus any amount the employee may have paid towards the equipment. 

Equipment reimbursed by the employer

The employee may have agreed to buy their own home office equipment for use whilst working at home and the employer has reimbursed the exact expense. Unless the employer has specified that they must transfer ownership to them, the equipment is owned by your employee.

There is no benefit charge on the reimbursement. There is also no benefit charge if the employer lets the employee keep the equipment as it is something that they already own.

Global Payroll Association Comment

As we said, this is timely and appropriate guidance from HMRC.

As employees are expected to return to the workplace over the coming weeks and months, it is relevant and good timing that HMRC have updated the above guidance.  A new section has been added called “Taxable benefit charge – returning office equipment”.

As well as pointing readers to the guidance, it is worth replicating this guidance in full, remembering we are talking about an employee returning office equipment. 

Equipment provided by the employer 

The employer may have supplied employees with office equipment so they could work from home.

There’s no tax charge when they return the equipment to the employer, so long as there’s no transfer of ownership.

If there is a transfer of ownership of the equipment to the employee, at any time, this will become an employee benefit. The charge will be on the market value of the equipment at the time of the transfer, minus any amount the employee may have paid towards the equipment. 

Equipment reimbursed by the employer

The employee may have agreed to buy their own home office equipment for use whilst working at home and the employer has reimbursed the exact expense. Unless the employer has specified that they must transfer ownership to them, the equipment is owned by your employee.

There is no benefit charge on the reimbursement. There is also no benefit charge if the employer lets the employee keep the equipment as it is something that they already own.

Global Payroll Association Comment

As we said, this is timely and appropriate guidance from HMRC.