As we have noted before the amount of government help in the world of tax is not extensive. However we have covered below the main areas of assistance, including Access to Work which although it is not a tax programme has tax implications. We cover below:
- Tax relief and exemptions for the disabled employee
- The disabled person who is self-employed
- Access to work scheme
For any employee earning more than £8,500 per year nearly all expense payments or benefits that are received from their employment are taxable. There is no general exemption for disabled employees but there are some relaxations to the rules and a few exemptions which should be considered.
1. Equipment services and facilities generally
Normally where an employer provides equipment or services to an employee for personal as well as business use, a taxable benefit will arise. However, if an employee is disabled, there is no tax on any equipment, services or facilities the employer makes available to enable them to take up or stay in work, even if there is substantial private use. However, this is subject to the following conditions:
- similar benefits must be made available to all disabled employees;
- the main purpose of the benefit must be to enable the employee to do their work; for example, the provision of a hearing aid or other equipment, services or facilities, even if the equipment is used privately. This would cover the cost of a reader for someone with a visual impairment; a support worker for practical help in getting to and from work; new equipment or alterations to existing equipment; alterations to the premises to accommodate you.
- either the benefit is one that the employer must offer under the terms of the Equality Act (EA) 2010 or similar legislation, or it is provided under the Access to Work programme.
Note also that this exemption only applies where the employer or a third party meets the cost. Disabled employees cannot claim a tax deduction for costs which they bear themselves and are not reimbursed by their employer.
Full details of this exemption can be found on the HMRC website.
2. Home to work travel
There are strict rules which ensure that the costs of travel between home and work cannot be claimed as an allowable expense. If an employer pays or reimburses the cost then this amount becomes a taxable payment. However, no income tax or national insurance contributions (for either the employer or the employee) is payable if transport is provided between home and work for a disabled employee, or if the employer pays for such transport or reimburses the expense incurred.
The definition of disability for this purpose uses that in the EA 2010 of 'a physical or mental impairment which has a substantial and long-term adverse effect on his ability to carry out normal day-to-day activities.'
This exemption does not cover the provision of a car which is subject to other rules.
Note that again disabled employees cannot claim a tax deduction for costs which they bear themselves and are not reimbursed by the employer.
3. Provision of cars and fuel
There are special rules covering the taxable benefit where an employee has both business and private use of a company car and also where fuel is provided for both business and private motoring. These have been adapted to reduce the tax charged for a disabled employee.
The circumstances in which a disabled employee is not taxed if the employer provides a car or fuel, or pays or reimburses any related expense are:
- the car is specially adapted for the employee’s use, or fitted with automatic transmission because the employee cannot use a manual gearbox, and
- the employee uses the car only for business travel or for ordinary commuting between home and work.
The definition of disability for this purpose again uses that in the EA 2010 as given above.
However, this exemption is highly restrictive as it prohibits any private use of the car. Whilst the car benefit charge cannot be avoided if there is to be any private use of the vehicle, the fuel charge can be mitigated by the disabled employee paying for all private fuel other than for travel between home and work and training courses (which are allowed to be counted as business miles).
Specific rules for calculating company car benefit for disabled employees
In order to calculate any car benefit charge you need to know:
- the list price of the car at the date of registration;
- the cost of any accessories fitted to the car initially and added later; and
- the CO2 emission of the vehicle.
Adjustments can however be made to these figures before any tax charge is calculated where a disabled employee uses the car. The possible adjustments are as follows.
List price
The list price of the car to which the emissions figure is applied can be that for an equivalent manual version of the car if the disabled person must use an automatic version because of their disability. To qualify the disabled person has to hold a disabled person’s badge.
Accessories
Any special equipment designed to enable a disabled person to use a company car is exempt from tax if provided by an employer.
Any accessory which is designed solely for use by a chronically sick or disabled person can be ignored.
Additionally, certain other accessories can be ignored where they:
a) are included in a car provided to an employee who holds a disabled person's badge when the car is first made available, and
b) are made available for use with the car because that equipment enables the employee to use the car despite the disability entitling him or her to hold the badge.
CO2 emissions
In calculating the CO2 emissions figure where the car has an automatic engine the data for the equivalent manual version can be used, but only where the disabled employee must use an automatic version because of their disability. To qualify for this reduction the disabled person normally has to hold a disabled person’s badge.
4. Sundry minor reliefs
Termination payments
When employment ends often a final payment is sometimes made to the employee, which includes compensation payments or payment in lieu of notice. To the extent that any payments do not count as taxable earnings and are under £30,000 they are exempt from tax. A payment or benefit provided in respect of a disability of an employee will also not be taxable. However the payment must be made on account of the disability and for no other reason.
Use the link to see examples of what HMRC mean by ‘on account of’.
Overseas business travel
By concession directors and higher paid employees who require their spouse or partner to travel with them because of ‘precarious health’ are not liable to tax on the travelling costs of taking the spouse or partner with them on business trips.
Note that ‘precarious health’ is interpreted by HMRC as the person’s health being so poor that it is unreasonable to expect them to travel on their own.
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A self-employed person is someone who runs his or her own business or earns money on a freelance basis. You may be running the business in your own name as a sole trader or in partnership with others.
It is important to be sure that the tax office accepts that you are self-employed and not actually employed and further advice on this and other self-employed issues can be found here on our website.
As with employment income, there is no blanket tax exemption or deduction for the extra costs you incur on account of your disability. However any expenditure which is wholly and exclusively incurred for business purposes can be deducted from your taxable business income. This could include adjustments made to your office premises to accommodate you as well as books in special formats and specialist equipment. Always check with HMRC before spending the money, if the tax deduction is critical for you.
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Access to Work is a specialist disability, government financed programme which is run by Jobcentre Plus from three regional centres covering in England, Scotland and Wales. A similar scheme is run by the Department for Employment and Learning in Northern Ireland through their Disablement Advisory Service.
These centres can provide advice, an assessment of your needs in the workplace and a financial grant to your employer towards the cost of any services or non-standard equipment to help overcome work-related obstacles resulting from disability. It can also help provide a support worker and contribute to additional travel costs. An application has to be made by you (not your employer, if you are employed). Contact the appropriate centre between 9am and 5pm Monday to Friday.
Access to Work support is also available to those who are self-employed or about to set up a business. However it is important to remember that the grant will only cover the additional help you need because of your disability and apart from that is not intended to help you to any great extent in running the business.
The grant will however cover 100% of the cost and not, as in the case of an employee, only a proportion with the rest being met by the employer. Again contact should be made with Jobcentre Plus (or the Disablement Advisory Service) to discuss your needs.
Guidance has been published on what is considered ‘standard’ equipment and therefore not eligible for a grant, although an employer might be expected to provide it for a disabled employee.
Grants and help provided under the Access to Work provisions will not be liable to tax or national insurance contributions. However where the grant is used to take on a support worker or other assistance, tax and insurance issues will arise and a decision will need to be made as to whether the support worker is an employee or self-employed Our section on employed or self-employed gives helpful information.
Local Jobcentre Plus offices also have Disability Employment Advisers who can offer help and advice on any specialist support that is available.
A general overview of Access to Work can be found on Directgov and in the updated Disability Alliance (Disability Rights UK from 1 Jan 2012) factsheet which includes a full list of the equipment now considered to be standard and not eligible for a grant.
If you are self-employed some further practical information on Access to Work and other issues when setting up in business as a disabled person can be found on the Disability Means Business website.
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