Cash clinic: Fare way to deal with travel expenses and tax for trustees

Travel can be a squeeze - but do look into the expenses position

Q I am a trustee for a registered charity in Edinburgh and some of the trustees and committee members who attend meetings receive out of pocket expenses for their travel. However, I am also aware that some receive a small "honorarium", typically 1,000 a year, for attending meetings. What is the tax position regarding both the expenses and the payments?

BD Edinburgh

AHM Revenue & Customs (HMRC) is presently looking in general at income which is paid to office holders such as trustees or committee members. A general rule is that trustees should not benefit from a trust but may be paid for any services they provide. Generally such payments will not be treated under the pay as you earn (Paye) scheme but any remuneration should be treated as an annual payment and tax liability calculated accordingly. For a professional person then this can be calculated under Schedule D.

For committee members the situation is different and it may well be that Paye should be operated on any sums paid to them, but this will depend on the specific circumstances in each case.

If a committee member attends the charity's normal workplace to attend committee meetings, and is paid for doing so, then any expenses relating to home to work travel should be taxed. If, however, a committee member receives no payment for attending meetings and is only paid "reasonable" out of pocket expenses for travelling to and from meetings, then these are not taxable.

• Neil Whyte is a tax partner with accountants and business advisers PKF.

Q I work for a local authority and have been told that we aren't getting any pay rises for the next couple of years but that there are some benefits available which are being offered instead of money. What are the options available that are worth me taking?

CR Peebles

A Of course it depends on your employer, but generally most large public bodies should be able to offer a range of incentives as compensation for a lack of a pay rise. A couple of options include tax-free benefits such as child care vouchers. These can be offered worth up to 55 a week and can really assist those with families. The employer can also offer interest-free loans to employees, for almost any purpose up to a maximum of 5,000. This could be extremely beneficial to individuals, but the loan must be repaid: if it is written off by the employer, the amount written-off is treated as your taxable income.

• Brian Lovie is director of employment taxes with accountants and business advisers PKF

• If you have a question you need answered, please write to Jeff Salway, The Scotsman, 108 Holyrood Road, Edinburgh EH8 8AS or e-mail: [email protected].

This above is for general purposes only and is not tailored for individual use. It does not constitute legal, financial or investment advice on any particular matter and must not be treated as a substitute for specific advice.