Benefit in Kind Tax

Thrugelmir

junglizt wrote: »

Bit OT this Q.... A colleague in my office appears to be taxed BIK for a season ticket loan (<5k). I was under the impression that a loan as long as it was under 5k and paid up within the tax year was tax free, is that just a perk for directors of ltd companies?

I would question the BIK if the loan was beneath £5k.

Directors have no exemption.

holly_hobby

There are 2 things you can't evade in life .... death and taxes !!!

Its unfortunate that you were not aware of BIK and the regualtions that surround it. There are staff mortgages and those morgages arranged by staff by an associated or in house (typical if you work for an ins co) adviser.

If you just applied for a staff mge on staff rates, then that technically isn't advice, just acceptance of a staff incentive.

I had a staff mge many yrs ago when I worked for a large ins co - you just applied if your grading was high enough to qualify, recd the benefit & that was that. To be honest, I would argue that its your payroll dept that were at fault - they should have amended your tax code to accomdate your staff mge, once it was approved and you were in reciept of the benefit (as your receipt of a staff mge would have been on your HR & payroll record).

I would say that the fact your tax code wasn't amended was to your financial benefit at the time, as technically you should have been paying BIK from outset - as others with staff mges in your own or other companies, or any receipt of such benefits would have been subject to and paid from outset. (sorry I know you probably didn't want to hear that !)

HMRC are now aware of the benefit recd, and have elected to clawback the unpaid tax that is lawfully due - so that can't be avoided. Perhaps you could speak to them, and see if you pay it all in a lump sum or 2 large sums, if they could offer you a discount on the total amount owing ?

That may be the best option, as you will not evade paying the os tax, but at least you may be able to reduce your o/s bill a little ?

Could payroll help you with this in anyway, as it is technically they are wholly/partially negligent (which ever your viewpoint is), maybe you could get them to assist you in contacting HMRC to plead your case. Although HMRC "official" viewpoint would be that the onus is always on the individual to ensure that their tax coding is correct - but its an option ?

I'm sorry that you are in this position, but unfortunately if taxes are due, then they are due and HMRC always get their bounty !!!

Wishing you best of luck with your situation

Holly

Thrugelmir

holly_hobby wrote: »

To be honest, I would argue that its your payroll dept that were at fault - they should have amended your tax code to accomdate your staff mge, once it was approved and you were in reciept of the benefit (as your receipt of a staff mge would have been on your HR & payroll record).

The HMRC sets individual's tax codes not payroll departments.

holly_hobby

Yes of course HMRC SET tax codes ....... but payroll are involved in applying the correct tax code (including adjusments), at source to your remittance - although the individual should of course always verify themselves that the code applied is correct.

Holly

Thrugelmir

holly_hobby wrote: »

Yes of course HMRC SET tax codes ....... but payroll are involved in applying the correct tax code (including adjusments), at source to your remittance - although the individual should of course always verify themselves that the code applied is correct.

Which presumably has happened now that the P11d information has been processed and a revised coding notice issued.

holly_hobby

Correct ... but apparently somewhat delayed for our poor OP !!!