How do you treat assets that are available for personal use by employees?
If you are an employer and you make certain business assets available for your employee to use outside of work, you will have to report this to HMRC and there might be additional tax and National Insurance to pay as a result. These assets can include computers, televisions or bicycles.Cars, vans and living accommodation are covered by different HMRC rules and won't be covered in this guide – we will cover those separately.
This guide only covers assets which you allow your employees to use for personal use. If the asset has been sold, given or bought then it is treated separately and isn't covered in this guide – check out our handy guide on that.
There aren't many exemptions under this category but if the asset is a piece of office equipment and is solely provided for business use then you won't need to report this to HMRC or pay any National Insurance on it – unless it is part of a salary sacrifice arrangement, in which case it will need to be reported to HMRC.
If the asset isn't exempt (and as you will have seen, it most likely isn't) then you need to report it to HMRC and you might be expected to pay National Insurance on it.
There are some expenses which relate to assets for business use which are covered by exemptions (formerly known as dispensations) and in these instances, you don't have to include them in your end-of-year report to HMRC. Such exemptions include: phone bills, business travel, uniform and tools for work and any business entertainment expenses. If there is no exemption on the asset, you need to report it to HMRC on your P11D form although you won't need to deduct any tax or National Insurance on the assets if they are purely for business use.
If the asset is used for personal and business use, you need to report it to HMRC on your P11D form and pay Class 1A National Insurance on the value of the benefit.
How do you work out the value of the benefit?
You need to work out the value of the benefit before you can report it to HMRC – to do this you first need to take either the asset's annual value or the rental/ hire charges you pay for it (whichever value is the greatest) and then add on anything else you have spent on the asset during the year, such as its running costs and so on. The asset's annual value is then deemed to be 20% of its market value when you first provided it to an employee as a benefit. You then report this value to HMRC.
If you used the asset for business purposes in your company in some way other than making it available for employee use during that tax year.
If the asset forms part of a salary sacrifice arrangement (if the arrangement was made after 6th April 2017) and the cost of the asset is less than the amount of salary sacrificed, then you need to report the salary amount instead.