Employee benefits being reviewed
Businesses should be aware of a review into employee benefits currently being carried out by the Office of Tax Simplification (OTS).
The OTS, which provides independent advice to the Government on ways to simplify the UK’s tax regime, is looking into the complex system for reporting and taxing employee benefits.
It has already concluded, in an interim report, that the current system is in need of a radical overhaul.
The OTS plans to focus on reviewing four key areas in the coming months, including the administration of the P11D process, travel and subsistence, accommodation and termination payments.
In its interim report, the OTS also makes 43 suggestions for some quick simplifications, including streamlining the cycle to work scheme, aligning tax and national insurance treatment of mileage rates over 45p, changes to HM Revenue and Customs (HMRC) forms, and publishing a list of items that automatically qualify for a ‘dispensation’ (meaning that no benefit arises on those items for employees).
The report also identifies issues for further investigation, including payrolling employee benefits through the PAYE system and abolishing the £8,500 higher paid threshold for certain expenses and benefits in kind.
The OTS will use its findings to develop proposals to simplify the system which will be put forward to Chancellor George Osborne ahead of the next Budget in March 2014.
The OTS feels that the current system needs updating to make it less complicated and to reflect today’s working environment, so employers and employees alike will need to pay attention to proposals put forward, and prepare for the changes ahead.
In the meantime, employers who are unsure of their present tax obligations in relation to employee benefits may wish to seek professional advice to ensure they are compliant with existing legislation and take advantage of existing tax breaks.
For further information, please contact Stuart Hinnigan at the office.
Author: Stuart Hinnigan FCA CTA
Stuart’s career in accountancy began when he joined Preston based Moore and Smalley in 1994 following his graduation from Lancaster University. He qualified as a Chartered Accountant in 1997 and then chose to specialise in...
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