Where employees are required to work at home, their employer may provide office equipment or pay to boost the employee’s home internet service. Generally, these costs are not taxable on the employee if there is no significant private use of the asset or service.
In some cases, an employee can avoid being taxed on a benefit if they ‘make good’ the value of the benefit by reimbursing their employer. There are strict time limits for doing this.
All reimbursements of taxable non-payrolled benefits for 2022/23 must be made by 6 July 2023, which aligns with the date for submitting the P11D forms.
The dates for making good on payrolled benefits provided in 2022/23 are:
- 1 June 2023 for the value of road fuel used
- 5 April 2023 for all other benefits
The deadlines for making good do not apply to interest payable on beneficial loans and overdrawn directors’ loan accounts. Where such loans exceed £10,000 at any point in the tax year there is a taxable benefit if insufficient interest is paid.
This taxable benefit can be avoided if interest at least equal to the Official Rate is reimbursed, where the borrower is contractually obliged to pay it. The Official Rate for 2022/23 is 2% p.a.
Despite this exclusion for beneficial loans, most people should try to pay any interest due on a loan by the 6 July following the tax year, to avoid any doubt as to whether a benefit arises at the time the P11D form is being prepared.
Don’t miss the deadline for ‘making good’ any benefits you have received, if you want to avoid a tax charge.
