Updates to guidance on the treatment of expenses provided to employees during COVID-19

HMRC has updated two pages of guidance in relation to the treatment of certain expenses and benefits provided to employees during coronavirus and on checking which expenses are taxable if employees work from home due to coronavirus.

Within guidance, HMRC confirms how to proceed when returning office equipment. If the equipment is provided by the employer, so they have supplied employees with office equipment in order to enable them to work from home, there is no tax charge when they return the equipment back to the employer, as long as there is no transfer of ownership. If an employer does transfer ownership of the equipment to an employee, then this becomes an employee benefit. The charge must be calculated on the market value of the equipment at the time of transfer, minus any amount made good by the employee.

If an employee bought their own home office equipment to use when working from home and an employer has reimbursed the exact expense, then unless the employer has specified that the employee must transfer the ownership to them then the equipment is owned by the employee. There is no benefit charge on the reimbursement, and no benefit charge if the employer allows the employee to keep the equipment, as it is something that they already own.

Updated guidance confirms that, if employers pay for travel and subsistence expenses for employees travelling to temporary workplaces, if an employee was furloughed whilst travelling to a temporary workplace then the period of furlough forms part of that period of continuous work. A period of working from home is also counted as part of the period of continuous work. However, the workplace ceases to be temporary from the date that attendance there is expected to exceed 24 months. Tax and National Insurance (NI) contributions will at that point become liable on payments of any travel and subsistence expenses.

The information in this article is accurate at the time of publication.


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