How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask bigduckontax Your Own Question
bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4333
Experience:  FCCA FCMA CGMA ACIS
75394688
Type Your Tax Question Here...
bigduckontax is online now

If income tax payable has to be calculated; If a company has

Customer Question

If income tax payable has to be calculated;
If a company has given an employee £7200 for mileage, but the approved mileage rates come to £8000, what would the £800 be scheduled as on the income tax payable table? Furthermore, a low interest loan of 1.25% is provided to the employee of £200. What would this be written as on the table? I.e. Would the £200 not be paid due to benefits in kind etc? I'm really struggling
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer, and happy to help you with your question.
I am not quite sure which way the tax cat is jumping in this question, but I think I have an explanation for you.
The 7.2K paid by the company is allowable in their books of account as an expense against profits. If, however, an element of commuting is included than this must be reported at the year end on a Form 11D as a benefit in kind. An employee can only have one place of employment. If they are required to work elsewhere this is a temporary duty and a claim for motor mileage is appropriate.
The 7.2K received by the employee for the use of his own vehicle on company business is tax free assuming that no element of normal commuting is included. The balance of 800 quid can be claimed by the employee on his self assessment tax return as an expense in employment. Not many people know this although HMRC has a natty little booklet on the subject!
I do hope that I have resolved your conundrum.
Customer: replied 1 year ago.
So what would the benefits be?
Expert:  bigduckontax replied 1 year ago.
Sorry, I missed that point. The low interest loan might be a benefit in kind, but not at 200 quid, but at the difference between the commercial rate and the 1.25% charged.
Customer: replied 1 year ago.
The £200 is already the difference. Because the company owe the employee £800 for the approved mileage rates, how would they be put into the income tax payable
Expert:  bigduckontax replied 1 year ago.
Assuming that the company intends to pay the full rate of motor mileage then net out the 200 quid and pay him GBP 600 which will resolve the problem and no Form 11D action will be required.
Customer: replied 1 year ago.
So the £600 will be taxable benefits or would I claim £600 tax relief? I'm very sorry for annoying you
Expert:  bigduckontax replied 1 year ago.
The company would merely post ledger headings as follows:
an 800 debit to motor mileage and credit 200 to interest and 600 to cash/bank.
No, that's what I am here for. I am answering you from a country seven hours ahead of GMT so it's coming up to breakfast time here.
Customer: replied 1 year ago.
So what would be National Savings Income
Expert:  bigduckontax replied 1 year ago.
Sorry, I do not understand. What has National Savings to do with this question?
Customer: replied 1 year ago.
Income tax payable; to calculate there are NSI, SI & dividends column. I just didn't know where to put the numbers
Expert:  bigduckontax replied 1 year ago.
I am becoming more and more confused. To which return are you referring?
Customer: replied 1 year ago.
Would the £200 loan not be paid, as the employers owe £800 to the employee? So what would happen to the £600 left which the employers owe to the employee
Expert:  bigduckontax replied 1 year ago.
It would be paid out as I told you earlier. Possible book keeping transactions in the company's books of account would be:
Debit Motor Mileage [or possibly travel expenses] 800; Credit Interest 200, Credit Cash/Bank 600.
Customer: replied 1 year ago.
Thankyou for your help
Expert:  bigduckontax replied 1 year ago.
Delighted to have been of assistance.
Please be so kind as to rate me before you leave the Just Answer site.