Reply to: 24 months again

[TheFaQQer]

And while "contact HR" may be a default response, it isn't really the employers problem. The issue isn't whether the employer will pay for the travelling. It's whether HMRC consider that payment to be a BIK - and that is based upon the behaviour of the individual, potentially before they even joined that firm.

It becomes the employers problem when the employee refuses to travel to that project / site because they will be paying for it themselves. Some big consultancies will pay a bonus equivalent to the additional tax in that case.

If my employer expects me to travel to another site, then I expect them to pay for it. If that means there is an additional tax liability, then I expect the employer to meet that as well.

[malvolio]

I thought that the 40% rule applied just as much to permies as it did to contractors - and switching between contract and permie makes no difference. It's a personal tax applied at the individual level based upon geographical location.

My understanding is that if an employee works 50/50 between two sites (and expected to for 24 months), then travel to either site is considered normal commuting - even if the employer covers the cost of travelling to the more distant site.

And while "contact HR" may be a default response, it isn't really the employers problem. The issue isn't whether the employer will pay for the travelling. It's whether HMRC consider that payment to be a BIK - and that is based upon the behaviour of the individual, potentially before they even joined that firm.

I suspect there are quite a few roving permies who would be caught by this, but are completely unaware of the rules.

Well yes, but it all hangs on the definiton of yuor permanent workplace. Most - but obviously not all - permies have a clearly defined one, so everything else must be temporary. But the rule is, as we all know, complete bollocks and needs to be revisited.

And HR are involved since it it they who are responsible for your PAYE, which includes any BIKs arising from your employment, be it travel of medical insurance.

[centurian]

I thought that the 40% rule applied just as much to permies as it did to contractors - and switching between contract and permie makes no difference. It's a personal tax applied at the individual level based upon geographical location.

My understanding is that if an employee works 50/50 between two sites (and expected to for 24 months), then travel to either site is considered normal commuting - even if the employer covers the cost of travelling to the more distant site.

And while "contact HR" may be a default response, it isn't really the employers problem. The issue isn't whether the employer will pay for the travelling. It's whether HMRC consider that payment to be a BIK - and that is based upon the behaviour of the individual, potentially before they even joined that firm.

I suspect there are quite a few roving permies who would be caught by this, but are completely unaware of the rules.

[Peoplesoft bloke]

OK thanks all - I think I need to take some action on this before/in case Hector comes knocking.

[ASB]

Which is perfectly correct if he's only ever worked at the one location - after 24 months it becomes your permanent place of work.

And which is the point I missed in my original reply...

As long as you work at more than one client location, then the rule won't apply. Stay still and it will.

The rules are exactly the same. Geographical location etc

[TheFaQQer]

I suspect I know the answer but - does becoming a permie employee of a consulting firm reset the clock?

No.

[malvolio]

A guy I used to work with lives in Scotland. His employer's company provided him as a consultant to ex-clientCo. He was a regular employee - not a director. His employer paid all his hotel and travel expenses. After 2 years, Hector came knocking for BIK tax on the expenses.

Which is perfectly correct if he's only ever worked at the one location - after 24 months it becomes your permanent place of work.

And which is the point I missed in my original reply...

As long as you work at more than one client location, then the rule won't apply. Stay still and it will.

[mudskipper]

A guy I used to work with lives in Scotland. His employer's company provided him as a consultant to ex-clientCo. He was a regular employee - not a director. His employer paid all his hotel and travel expenses. After 2 years, Hector came knocking for BIK tax on the expenses.

[Moscow Mule]

In that case it must be Home.

If you have a contract of employment, it should be stated in there.

[Peoplesoft bloke]

Peoplesoft bloke - where does your employer expect it's employees to "work from" or "train from"* if they are in between placements for a few days/weeks?

If you can answer that then that's your permanent place of work and as already stated you can claim travel expenses for anywhere that isn't that place.

Not everything in permanent employment contracts is written down.

*you may sit around doing nothing but it's called something.

In that case it must be Home.

[Peoplesoft bloke]

You're a permie, now, not a contractor. Such things are your employer's problem, not yours. You will have a permanent place of work, even if it's nominally your head office. In 20 years of permanent and very mobile employement I never once caught a BIK for travel.

However, why ask us, especially if you don't like the answer. Talk to your HR team. Ten gets you one they won't even understand the question.

Why ask you? I thought someone might know. I'm sorry if I seemed ungrateful - I'm really not. You are right about HR except we're so small we don't have HR. Are you really saying 24 month rule doesn't apply to permies? I'm only labouring the point cos her indoors worked for Steria and they refused to pay expenses if you were on a gig for >24 months - citing HMRC but maybe they were just being gits about it.

My precise question was contractor related in that I need to know if the 24 months gets reset if you go permie but end up in the same location.

[SueEllen]

Peoplesoft bloke - where does your employer expect it's employees to "work from" or "train from"* if they are in between placements for a few days/weeks?

If you can answer that then that's your permanent place of work and as already stated you can claim travel expenses for anywhere that isn't that place.

Not everything in permanent employment contracts is written down.

*you may sit around doing nothing but it's called something.

[malvolio]

I don't have a designated permanent place of work - it's just wherever the gig is. I know about the problems "you contractors" face as I was one for many years. My main question is about how the fact that I'm now back (against my will really) the place I did almost 24 months of contracting not that long ago I am worried that I'm at risk of a personal tax liability if I continue to accept tax free payments for travel and accommodation.

Bunk - I don't think the company is going to wind up paying tax that is down to me, but I may be wrong.

You're a permie, now, not a contractor. Such things are your employer's problem, not yours. You will have a permanent place of work, even if it's nominally your head office. In 20 years of permanent and very mobile employement I never once caught a BIK for travel.

However, why ask us, especially if you don't like the answer. Talk to your HR team. Ten gets you one they won't even understand the question.

[Peoplesoft bloke]

24 months doesn't apply since you will have a designated permanent place of work and any time you get sent somewhere else to work it is a de facto temporary workplace. The problem us contractors face is that after 24 months a temporary workplace gets re-designated as permanent. That's something that won't happen to a permie unless you were claiming expenses from your previous permanent location to your new one, in which case they become a BIK after 24 months.

I don't have a designated permanent place of work - it's just wherever the gig is. I know about the problems "you contractors" face as I was one for many years. My main question is about how the fact that I'm now back (against my will really) the place I did almost 24 months of contracting not that long ago I am worried that I'm at risk of a personal tax liability if I continue to accept tax free payments for travel and accommodation.

Bunk - I don't think the company is going to wind up paying tax that is down to me, but I may be wrong.

[malvolio]

24 months doesn't apply since you will have a designated permanent place of work and any time you get sent somewhere else to work it is a de facto temporary workplace. The problem us contractors face is that after 24 months a temporary workplace gets re-designated as permanent. That's something that won't happen to a permie unless you were claiming expenses from your previous permanent location to your new one, in which case they become a BIK after 24 months.