Are benefits provided to self-employed taxable?

[joe90]

If a business takes on a worker on a self-employed basis and then provides some benefits, what if anything does the self-employed worker have to declare on his SA tax return? (Assume that the total remuneration including benefits is < £8,500 pa which means that if the individual was an employee, most benefits, except living accommodation, would be tax-free.)

I know that there is an employment status issue here but, ignoring that for the present and taking each benefit on its own, WHAT should the self-employed person enter, if anything, into his SA return, and WHERE would it be shown, as regards:

a) provision of free living accommodation? or
b) pension contributions paid on his behalf? or
c) a car provided for his use?

(These would not be gifts - the business would be claiming these costs as tax deductible.)

[mullet]

I think you need to take a step back and think about the employment status. Precisely what work is being done? What are the indicators which lead you to the conclusion that this worker is self-employed?

[joe90]

I did say that there was an employment status issue here and also that I want to ignore that for the purpose of this query. Assume that all indications of self-employment exist (control, risk, own hours, rate for the job, own tools, etc, etc) then what should the self-employed person declare on his SA tax return, and where would that be entered, if he receives just 1 of the following benefits:
living accommodation or
pension contribution or
car?

[joe90]

Any ideas anyone? This may be unusual and difficult but some help would be greatly appreciated.

[section 44]

If the individual is self-employed then wouldn't the value of the benefits be money's worth (in kind) consideration for the provision of their services? Failing that, wouldn't there be a Sharkey v Warner (now statutory) type adjustment (to market value) of the services supplied. Hence, taxable turnover/sales.

[MrPAYE]

[quote="joe90"]I did say that there was an employment status issue here and also that I want to ignore that for the purpose of this query. /quote]

But there's your issue, which is probably why not many have responded to this post.

The provision of a car and/or free living accommodation and/or contributions to a personal pension to a self employed worker stinks of an employer/employee arrangement and it will almost certainly be picked up by HMRC at some point and the status challenged. This will either be through the normal route of a PAYE audit on the 'employer', or more likely once the tax return is received from the 'employee' declaring free benefits on his self employed pages.

The £8500 rule for BIK applies to employees so you can't use this as a reason not to declare the benefits on the tax return under self employment.

If HMRC are doing their job properly (rare I know !), employment type benefits declared on a self employed tax return should be picked up automatically for further review.

[towat]

Just face it, he is an employee and the benefits need to be entered on the P11D by the "Employer".

I believe from memory there is a question on form P11d(b) and/or P35 along the lines of "Have you provided any benefits to any other third parties? if so give details"

[joe90]

Right, message received and understood - the benefits lead to employee status. Many thanks for your help - it's appreciated.

[King_Maker]

The car should not pose a problem.

Just give him/her the money to take out the pension.

Accommodation might be more difficult but doable, IMHO.

If self-employed, it's very likely that Market Value of the goods/services would be the relevant amount.

[mullet]

I am still interested to know

Precisely what work is being done? What are the indicators which lead you to the conclusion that this worker is self-employed?