At the end of last month the Office of Tax Simplification (OTS) published its eagerly anticipated Second Report into the tax treatment of Employee Benefits and Expenses.
Not everyone will wish to read all 86 pages of the Report, therefore we have produced a summarised version, together with some of ET4B’s own observations, in this attached document. However the fundamental questions addressed boil down to two things; can interpretation and administration of the rules be made any simpler, and can HMRC do more to help employers in their (sometimes reluctant) role as informal ‘tax assessor and collector’.
Amongst some fairly significant changes proposed by the OTS, the main ones are as follows:
– HMRC should actively encourage employers to voluntarily payroll benefits.
– There should be a legislative P11D exemption for benefits which have been fully taxed and NIC’d via payroll.
– The scope of PAYE Settlement Agreements (PSAs) should be widened. In addition, an online PSA return completion process should be introduced, and the current need for employers to ‘apply’ for a PSA should be abolished completely.
– There should be a clearer definition of certain benefits.
– Dispensations to be replaced by a statutory exemption.
– Abolition of the £8,500 ‘higher paid’ P11D threshold.
– Simplification of Travel and Subsistence and other expenses deduction rules.
– Simplification of NICs generally.
Substantial changes may not happen overnight and so employers must continue to meet their existing ongoing obligations. At ET4B we pride ourselves in being able to abbreviate these complex matters significantly, translating these into plain English and simple guidelines, whilst of course keeping a close eye on possible future changes. If you feel ET4B can assist your own organisation in this rapidly changing environment please do not hesitate to contact us.