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The complex system for reporting and taxing employee benefits and expenses is ripe for an overhaul, according to an interim report from the Office of Tax Simplification (OTS).
The document identifies issues for further study, including the payrolling of benefits, abolishing the £8,500 higher-paid threshold, and smoothing the differences between tax and National Insurance rules.
The complex system for reporting and taxing employee benefits and expenses is ripe for an overhaul, according to an interim report from the Office of Tax Simplification (OTS).
The document identifies issues for further study, including the payrolling of benefits, abolishing the £8,500 higher-paid threshold, and smoothing the differences between tax and National Insurance rules.
It also makes 43 suggestions for quick simplifications, ranging from streamlining the cycle to work scheme and aligning tax and National Insurance treatment of mileage rates over 45p, to making changes to the HMRC forms and publishing a list of items that automatically qualify for dispensation.
The OTS now aims to focus on four core areas in the coming months: HMRC’s administration of the system including the P11D form; travel and subsistence, accommodation, and termination payments.
The body’s tax director, John Whiting, said “It is clear the current system for reporting expenses and benefits is not working well for employers or employees, or, in many cases, HMRC. Time and again – through our workshops and in submissions – people have told us that the rules around travel and subsistence, accommodation or HMRC admin, are causing problems and costing time.
“We are now looking to develop workable ideas that will make things easier for everyone, with the aim of significantly reducing the 4.5m P11Ds completed annually. We will be putting forward our proposals in our final report to the chancellor before the next Budget,” Whiting added.
The report – on which comments can be emailed – marks the halfway stage of the OTS’s review of employee benefits. Final details of the next stage will be agreed with Treasury ministers over the summer and recommendations will be reported before the Budget.
