Taxation Of Benefits – A Quick Look
One thing that you need to know as you try to understand taxation issues is the issue of how benefits are taxed. This particular area is usually ignored by so many people when they are talking about tax issues, because most of these benefits are not clear-cut, especially when their values cannot easily be quantified objectively in this article, we are going to asses how you should handle tax issues that relate to your benefits that you received from the employer.
Assess Your Benefits
The first thing that you ought to do if at all you'd like to know how much taxes you're supposed to pay, is to see other you receive any taxable benefits. Some of the benefits that you may be receiving from your employer could be the company car, medical insurance with a private company and an interest free loan or a loan whose interest is below the market rates. Now, once you are able to gather all these documents, what happens is that you will be required to put all these in the form P11D from where the employee will then determine how much money you should pay on the benefits.
One thing that you need to know however is that even before the calculations on the amount of taxes begin, the employer needs to first asses whether the total amount of company benefits exceed 8,500 pounds. Once he determines that the amount exceeds 8,500 pounds, he then goes ahead to tell the HMRC the total value of the benefits. Now here is where tax issues begin to come up in earnest.
Once the total amount of benefits have been added up, the next step is to take this amount and add it to the other untaxed income that you have already earned. This income could be your income from consultancy, income from a second job, or from any other source.
You need to understand that there are certain benefits that are normally taxed. Among these benefits that you should keenly watch out for is the company car allowance, the education allowance (for the children,) and the interest-free loan among others.
It is therefore important that you look at the impact of taxation on the benefits before you accept a benefit from the organization. This way, you will not end up being taxed on benefits that really didn't benefit you in any way.
From the information above, it is hoped that you will be able to understand the role of benefits when it comes to taxes.
Assess Your Benefits
The first thing that you ought to do if at all you'd like to know how much taxes you're supposed to pay, is to see other you receive any taxable benefits. Some of the benefits that you may be receiving from your employer could be the company car, medical insurance with a private company and an interest free loan or a loan whose interest is below the market rates. Now, once you are able to gather all these documents, what happens is that you will be required to put all these in the form P11D from where the employee will then determine how much money you should pay on the benefits.
One thing that you need to know however is that even before the calculations on the amount of taxes begin, the employer needs to first asses whether the total amount of company benefits exceed 8,500 pounds. Once he determines that the amount exceeds 8,500 pounds, he then goes ahead to tell the HMRC the total value of the benefits. Now here is where tax issues begin to come up in earnest.
Once the total amount of benefits have been added up, the next step is to take this amount and add it to the other untaxed income that you have already earned. This income could be your income from consultancy, income from a second job, or from any other source.
You need to understand that there are certain benefits that are normally taxed. Among these benefits that you should keenly watch out for is the company car allowance, the education allowance (for the children,) and the interest-free loan among others.
It is therefore important that you look at the impact of taxation on the benefits before you accept a benefit from the organization. This way, you will not end up being taxed on benefits that really didn't benefit you in any way.
From the information above, it is hoped that you will be able to understand the role of benefits when it comes to taxes.
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