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Agents warned of danger of accepting freebies
Funway Holidays’ managing director Stephen Rhodes warns travel agents that accepting freebies from suppliers could land them with an unexpected tax bill.
"We all know that our salary is taxed, but how many people realise that every benefit we receive is also taxable?
Her Majesty’s Revenue & Customs (HMRC) rules are very clear – any money or benefit you receive must have tax and National Insurance paid on it.
So shopping vouchers, capital bonds, points schemes are all benefits so tax and national insurance must be paid.
If it’s not paid [by the supplier] then it’s your responsibility to pay the tax. You have to do this by filling out a fairly complicated self-assessment form so it’s much easier if the company giving the benefit pays the tax and national insurance.
So are FAM trips a taxable benefit? The answer is no because they are educationals – all part of the learning process! Thank goodness for that.
What I find concerning is that a lot of tour operators, airlines and hotels do not make it clear who is responsible for the tax problem, many say nothing, which means the responsibility for tax and National Insurance is yours, the travel agent.
Other [suppliers] mention that they pay the National Insurance but don’t mention tax, and therefore the travel agent [I assume] must pay it.
There are only two HMRC-approved [travel] schemes in the UK [that I am aware of where the tax and NI are paid by the supplier]. Funway’s Moneycard Visa debit card scheme is one the other is USAirtours.
The amount we [at Funway] pays is very high. It costs us £14.23 for every £10 booking incentive we give out. This is quite a commitment but means Funway MoneyCard travel agents can spend the money on the card without worrying about paying tax.
So why don’t more tour operators pay the tax and NI and clearly state they do?
Basically to save money and put the onus on the payment of tax liability on the travel agent which in my view is not fair.
What is ABTA doing about this? Surely there should be a clear code of conduct that all operators pay the tax liability on behalf of the travel agent?
If you are offered any incentive to book with a supplier, ask who is paying the tax and NI. If the answer is the supplier. then great, if there is no answer or the answer is the travel agent then either fill out a self-assessment form at the end of the tax year or say no thank you."
Linsey McNeill
Editor Linsey McNeill has been writing about travel for more than three decades. Bylines include The Times, Telegraph, Observer, Guardian and Which? plus the South China Morning Post. She also shares insider tips on thetraveljournalist.co.uk
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