Travel expenses situation at work as a graduate

peter_parker786

Altior said:

peter_parker786 said:

The location in the contract is, and will always, be the London office. Travel policy is you can’t expense to a contractual location, but it’s a managerial responsibility to uphold this of which I’ve gotten approval from two managers.

Yes, so from the information available it sounds like a managerial misunderstanding. 

Possibly there will be a correction to the tax affairs, as others have alluded to, it sounds like BiK. 

Ordinarily, it shouldn't matter where the colleague is located, if it's a regular place of work then travel affairs are the colleague's responsibility. In practice obviously, this can often form part of the initial negotiation. But for example if you said you'd accept the position but want to remain in the Midlands, and they agreed to cover your cost of travel on the days you attend, it's liable to be taxed as it's effectively part of the salary package.

BIK? I’ve never heard of this before. 

Should I just carry on as I am or pay it myself? I think to be on the safe side it makes sense to pay it, although one person on the forum said to just carry on as I am.

peter_parker786

Lavendyr said:

Any decent employer would not clawback if you have documented managerial approval for your expenses. 

If you don't receive London weighting are you sure you are contracted to London?

Yes I am definitely contracted to London.

Altior

peter_parker786 said:

Altior said:

peter_parker786 said:

The location in the contract is, and will always, be the London office. Travel policy is you can’t expense to a contractual location, but it’s a managerial responsibility to uphold this of which I’ve gotten approval from two managers.

Yes, so from the information available it sounds like a managerial misunderstanding. 

Possibly there will be a correction to the tax affairs, as others have alluded to, it sounds like BiK. 

Ordinarily, it shouldn't matter where the colleague is located, if it's a regular place of work then travel affairs are the colleague's responsibility. In practice obviously, this can often form part of the initial negotiation. But for example if you said you'd accept the position but want to remain in the Midlands, and they agreed to cover your cost of travel on the days you attend, it's liable to be taxed as it's effectively part of the salary package.

BIK? I’ve never heard of this before. 

Should I just carry on as I am or pay it myself? I think to be on the safe side it makes sense to pay it, although one person on the forum said to just carry on as I am.

If it was me I'd allow the pay team to sort it out, but be prepared for a backdated tax 'bill' via paye. 

BiK is shorthand for Benefits in Kind. In the old days, businesses used to 'pay' staff by proxy to keep the salary line lower, benefited both parties. So legislation nowadays ensures that it's all liable for IT. For example, if you get private medical insurance paid for by the firm, that has an implied value and you'd pay income tax on the value, prorated across the year. 

Hoenir

Altior said:

peter_parker786 said:

Altior said:

peter_parker786 said:

The location in the contract is, and will always, be the London office. Travel policy is you can’t expense to a contractual location, but it’s a managerial responsibility to uphold this of which I’ve gotten approval from two managers.

Yes, so from the information available it sounds like a managerial misunderstanding. 

Possibly there will be a correction to the tax affairs, as others have alluded to, it sounds like BiK. 

Ordinarily, it shouldn't matter where the colleague is located, if it's a regular place of work then travel affairs are the colleague's responsibility. In practice obviously, this can often form part of the initial negotiation. But for example if you said you'd accept the position but want to remain in the Midlands, and they agreed to cover your cost of travel on the days you attend, it's liable to be taxed as it's effectively part of the salary package.

BIK? I’ve never heard of this before. 

Should I just carry on as I am or pay it myself? I think to be on the safe side it makes sense to pay it, although one person on the forum said to just carry on as I am.

If it was me I'd allow the pay team to sort it out, but be prepared for a backdated tax 'bill' via paye. 

BiK is shorthand for Benefits in Kind. In the old days, businesses used to 'pay' staff by proxy to keep the salary line lower, benefited both parties. So legislation nowadays ensures that it's all liable for IT. For example, if you get private medical insurance paid for by the firm, that has an implied value and you'd pay income tax on the value, prorated across the year. 

Employers are also obliged to correctly report BIK on forms P11d to both the employee and the HMRC. Failure to do so can incur considerable penalties in addition to the liability for the tax and Class 1s Nic due. 

peter_parker786

Hoenir said:

Altior said:

peter_parker786 said:

Altior said:

peter_parker786 said:

The location in the contract is, and will always, be the London office. Travel policy is you can’t expense to a contractual location, but it’s a managerial responsibility to uphold this of which I’ve gotten approval from two managers.

Yes, so from the information available it sounds like a managerial misunderstanding. 

Possibly there will be a correction to the tax affairs, as others have alluded to, it sounds like BiK. 

Ordinarily, it shouldn't matter where the colleague is located, if it's a regular place of work then travel affairs are the colleague's responsibility. In practice obviously, this can often form part of the initial negotiation. But for example if you said you'd accept the position but want to remain in the Midlands, and they agreed to cover your cost of travel on the days you attend, it's liable to be taxed as it's effectively part of the salary package.

BIK? I’ve never heard of this before. 

Should I just carry on as I am or pay it myself? I think to be on the safe side it makes sense to pay it, although one person on the forum said to just carry on as I am.

If it was me I'd allow the pay team to sort it out, but be prepared for a backdated tax 'bill' via paye. 

BiK is shorthand for Benefits in Kind. In the old days, businesses used to 'pay' staff by proxy to keep the salary line lower, benefited both parties. So legislation nowadays ensures that it's all liable for IT. For example, if you get private medical insurance paid for by the firm, that has an implied value and you'd pay income tax on the value, prorated across the year. 

Employers are also obliged to correctly report BIK on forms P11d to both the employee and the HMRC. Failure to do so can incur considerable penalties in addition to the liability for the tax and Class 1s Nic due. 

Right, I don’t think this is something I should worry about - I genuinely had no idea about BIK, and was never brought up with me as a consideration as a graduate. For now, I’m just going to pay it for myself - despite my current line manager insisting otherwise. 

Altior

As I was alluding to earlier, the graduate program is a red herring. 

It's quite common for new starters to go to different locations around the country as part of their onboarding process for a new role. Graduate scheme or not. This can all be expensed with no tax liability, including sustenance, reasonable hotel etc. But if your graduate training/onboarding and subsequent permanent role is all the same location, it can't. 

In layman's terms you'd be expected to relocate closer to where the job is, or foot the cost of the commute yourself. Other colleagues who are closer to the location wouldn't get any compensation for travel costs (I'm assuming). 

However, if your employer has agreed to pay for your travel, they can't walk away from that. As has been covered, the potential tax liability remains. To resolve the situation going forward, you may be able to get a remuneration adjustment for example. It all depends upon what was agreed and/or written down. I don't see any personal responsibility or accountability on your part, from what has been outlined. But likely HMRC will want their scalp of what you have received as an effective BiK. 

QrizB

peter_parker786 said:

Right, I don’t think this is something I should worry about - I genuinely had no idea about BIK, and was never brought up with me as a consideration as a graduate. For now, I’m just going to pay it for myself - despite my current line manager insisting otherwise. 

In your position, I'd continue to claim the expenses but put any potential tax liability (20%, unless you're a higher-rate taxpayer) into a cash ISA or similar savings account just in case you're asked to repay any BIK tax liability.
Receiving 80% of something is better than 100% of nothing.

DullGreyGuy

peter_parker786 said:

Altior said:

peter_parker786 said:

The location in the contract is, and will always, be the London office. Travel policy is you can’t expense to a contractual location, but it’s a managerial responsibility to uphold this of which I’ve gotten approval from two managers.

Yes, so from the information available it sounds like a managerial misunderstanding. 

Possibly there will be a correction to the tax affairs, as others have alluded to, it sounds like BiK. 

Ordinarily, it shouldn't matter where the colleague is located, if it's a regular place of work then travel affairs are the colleague's responsibility. In practice obviously, this can often form part of the initial negotiation. But for example if you said you'd accept the position but want to remain in the Midlands, and they agreed to cover your cost of travel on the days you attend, it's liable to be taxed as it's effectively part of the salary package.

BIK? I’ve never heard of this before. 

Should I just carry on as I am or pay it myself? I think to be on the safe side it makes sense to pay it, although one person on the forum said to just carry on as I am.

Your total reward package is made up of your salary and other benefits. Historically people would get things like a company car and take a lower salary because they now get a brand new car every 3 years without having to pay for it. As such you are getting a non-cash benefit and so that needs to be taxed, known as BIK. 

These days places do flexible benefits so people can get discounted supermarket vouchers or (in my world of financial services) discounted mortgages etc all of which gets caught up in BIK. 

It's not a scary thing, they just effectively add the cash value (other than cars which has a more complex calc) to your salary when working out your tax. So if you're a 40% tax payer you will just pay 40% of the value so you are still quids in. 

Have to say I was caught out once though as my last employer sent round a note in November saying everyone was getting £1,000 of wine as a Xmas present and you could choose between 1, 2 or 3 cases and white, red or mixed. I was surprised at the time as there was also the option to opt out and I wondered why anyone but the most strict t-totaller would opt out rather than use them as gifts. Found out when the P11D turned up with £1,000 of wine listed as a BIK. 

Hoenir

Recall in 1995 my then employer , which operated under 3 regional divisions. Having the joys of a full on HMRC payroll audit. We received a clean bill of health. The other two divisions were found not to be complying with a catalogue of misdemeanours. Final negotiated settlement was a £500k liability. Since then the penalties have been increased and are even more onerous. 

. 

Grumpy_chap

Hoenir said:

Recall in 1995 my then employer , which operated under 3 regional divisions. Having the joys of a full on HMRC payroll audit. We received a clean bill of health. The other two divisions were found not to be complying with a catalogue of misdemeanours. Final negotiated settlement was a £500k liability. Since then the penalties have been increased and are even more onerous. 

. 

But, those penalties apply to the employer, not the employee.

It is for the employer to correctly declare the OP's expenses through RTI or P11D.  

The OP should carry on claiming the expenses, but save 20% of the expenses so that, if it turns out that there is an income tax liability, the OP can pay that easily.
To stop claiming would mean the OP get 0%.
If the OP claims and there is no tax liability, the OP gets 100%.
If the OP claims and there is a tax liability, the OP gets 80%.

80% of something or 100% of something is a lot more than 0% of something.