Understanding P11D

SpeedSouth · 24 January 2023 at 2:26PM

Hi,
Wonder if someone can clarify my thinking/understanding of how these affect take home.

I have a contract that states my place as work as home. Before covid this was the same and my travel expenses/food/hotels was all covered. At the time there was a question if it was actually a benefit given the amount of expenses but it didn't come to anything. Covid happened so I was sat at home and the odd trip was not an issue.

Now my role has changed and it will likely see me in London twice a week as a minimum. So with trains/tubes/food etc in the region of £12K a year I'd guess. 40% of my working week which appears to be one of the criteria for whether it is a benefit or not.

I've looked at the terms of whether I'm a regular visitor, whether its commuting etc and I'd say it's not cut and dried, however if it does go on as a taxable benefit is it a case of I claim all my expenses as I currently do then at the end of the year I'd pay tax at my nominal rate of that £12K.

I earn £70K but SS under the £50K bracket,
So would that see the tax bill as 20% of £12k or £2,400.
If down the line I decide I don't want to SS am I then paying 40% of that £12K so £4,800?

Just want the info should the question be raised and if I ask for salary increase to cover the tax bill.

Thanks
Adam

DullGreyGuy · 24 January 2023 at 2:39PM

You need to take into consider the BIK value on top of your salary when considering what your nominal rate of tax is.

Havent seen HMRC guidance for a number of years but its possible for a person to have more than one permanent place of work and given the frequency and duration you've been visiting it would be hard to claim its a temporary arrangement

SpeedSouth · 24 January 2023 at 2:52PM

Thanks so that essentially puts me at a salary of £82K would it?

With ad hoc expenses the amount is obviously not set, so at the end of the year that figure is completed for the P11D is it? Does the tax shake out over the year on an assumed £12K for example and then any variances + or - are shaken out in the following tax year?

Would that mean I'd need to be salary sacrificing £32K into my pension to ensure I only paid 20% on that £12K? How does that aspect work?

SpeedSouth · 26 January 2023 at 1:39PM

Is my understanding of how the P11D affects my take home correct?

Jeremy535897 · 26 January 2023 at 3:35PM

If the £12,000 reimbursement is treated as a benefit in kind, or just as pay, then you would have to do a salary sacrifice of about £32,000 to keep below the 40% tax rate. You have an annual allowance of £40,000 (employer and employee contributions combined).

gareths1980 · 26 January 2023 at 9:13PM

Personally can't see how using the train to get to London for work purposes can be classed as BIK. surely if it's a work requirement shouldn't they be buying you the tickets?