Q. Earlier this year, one of our employees was permitted to take a company-owned projector we use for seminars home for a couple of months for films and sport screenings. The company didn't need this piece of equipment as we were prohibited from organising in-person events at the time. I mentioned this to our accountant who told me that there will be a tax charge. As the employee only had the equipment for six weeks, I was under the impression that private use was minor (i.e. only six weeks out of 52, and then only for a few hours a day). Who is correct?
A: Your accountant is right, the amount of time the equipment was used for is irrelevant, it's the fact that it was available for the employee's personal benefit that is the key factor. However, the tax charge is likely to be relatively low due to the short duration.
To work out the reportable amount, you need to make a reasonable estimate of the value of the asset at the time it was first made available to the employee. You multiply this by 20%, and then pro-rate to ensure that the charge is restricted to the six-week loan period. So, if the equipment was worth £1,000, the chargeable amount would be £1,000 x 20% x 42/365 = £23. A higher rate taxpayer would therefore pay just £9 in tax on this. Of course, if the value of the equipment is considerably more, the charge will increase.
The other thing to note is that there will also be a Class 1A NI charge on the company, and the £23 benefit will need to be reported on the P11D.
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