Snow, snow, go away!
Just when you thought the snow was thawing... there's more lying now here in Cumbria and we're forecast more. Argh!
What can you do as a business to cope in this weather, and what are the tax consequences?
The temperature is one problem, but the main one is that it's much harder for people - staff, customers, suppliers - and goods to get from A to B.
So what can you do to mitigate this problem?
Remote working / working from home
These conditions are when remote working really comes into its own. If your staff can work from home, then they don't have to worry about whether they can safely get to work, and you don't have to worry about whether they're only pretending to be snowbound and are actually having an extra day off. And to meet with your customers, you could use video calls or telephone conferencing.
Providing homeworking equipment
If you provide equipment to your employees to let them work from home, such as a computer or Internet connection, then unless the employee is only allowed to use it for work, the equipment is a taxable benefit and needs to be reported on your form P11D.
Reimbursing homeworking costs
You may also decide you'd like to reimburse your employees for some of the cost of running their home while they're working at home during the bad weather.
There is a restriction on reimbursing homeworking costs, though. HMRC's website says that you can reimburse these costs only if:
- the facilities the employee needs for their work aren't available at your workplace, or
- the employee's work requires them to live too far from your workplace for it to be reasonable for them to travel there on a daily basis
In my own view, the first case would only apply in bad weather conditions if your entire office, or the employee's department, was shut because of snow, or if you'd told them not to come in.
And in the second, you'd be reimbursing the expenses all the time, not just when it snowed. Because it has to be that the employee lives too far away because of work. If your employee lives on their sales patch and can't get into the office because of snow, that's fine. But if your employee chooses to live in the heart of the Northumbrian moors, normally commutes quite happily to Newcastle but can't because of the snow - then no go.
Be prepared to argue your case with HMRC.
Even if one of these conditions is met, if you want to avoid the reimbursement becoming a taxable benefit, you can only pay them back for the additional extra costs they incur. So if your employee would normally set the heating to switch off at 9am after they go to work and come back on at 4pm to warm the house through for when they come home, but has to leave it switched on all day, then you could only pay them back for the cost of running the heating between 9am and 4pm - because that's the extra caused by them working from home. You can't pay the whole cost of heating the house without incurring a taxable benefit.
And if you're reimbursing more than £3 a week, you have to keep evidence to show you have only reimbursed the additional extra cost.
More info here on HMRC's website.
Remote working impossible
But what if the kind of business you run means that remote working isn't an option?
To make sure your staff can get to work, you could issue them with a company skidoo (now I wonder what the benefit in kind issues would be on a company skidoo?).
More practically, if you provide company cars which are available to your employees for private use, that is of course a taxable benefit. So to have any chance of reducing the benefit, you'd need to stop your staff using the car for private use while the bad weather lasts - and as travelling to and from work counts as private use, you'd have a job to do that!
But part of your fleet maintenance could include making sure all company cars are fitted with winter tyres, and that any employees who have to drive on minor roads to get to work are issued with snow chains.
Providing local hotel accommodation
Some businesses are putting their staff up in hotels local to the workplace, to make sure they can get in. BUT there is actually no tax relief on this cost - because any travel between a permanent workplace and somewhere else that isn't a workplace counts as what HMRC call "ordinary commuting" on which no tax relief is available. See point 3.4 on this helpsheet from HMRC, which actually gives the example of an employee put up in a hotel near his permanent workplace.
"No tax relief available" means that, if you've put it in Travel and it's showing as part of the expenses that reduce your tax, you have to add it back in your tax computation when you're working out your taxable profit, so that the amount of profit you have to pay tax on, goes up. Ouch!
And also, the accommodation is treated as a benefit in different ways depending on how the accommodation is paid for, so whether your employee arranges and pays for it and you pay them back, whether they arrange it and you pay for it, or whether you arrange it and pay for it directly. More information here on HMRC's website. This page covers both travel costs and related costs including accommodation.
So the tax cost of putting staff up in hotels can get very nasty, and you need to weigh this up against what you would lose in terms of income earned if your staff couldn't get to work on one or more days.
I'm a freelancer with no staff and I work from home.
If you're freelance, and you can't get to your customers and find you can't work - then take Nigel Temple's excellent advice which he posted on Twitter:
"Snowed in again? Great opportunity to work on your marketing plan, get some writing done and build your network."
Sadly, unlike for individuals, the government doesn't issue Winter Fuel Payments or Cold Weather Payments to small businesses. (Now wouldn't it be great if they did.)
Nor are there any specific tax perks for working from home.
So in summary, the cold weather means extra tax complications as well as all the other problems it causes.
Batten down the hatches and hope the worst is over!
- How MTD will work for businesses with an accounting year that doesn't match the tax year
- Important news for contractors - changes to IR35
- New tax year: what has changed?
- New VAT flat rate scheme rate for certain businesses
- Why the first week of April is the best time to switch to a new accounting system