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Government publishes four condocs
The government has unveiled a raft of proposals aimed at simplifying the taxation of benefits in kind and expenses. Four consultation documents are open for comment, in response to recommendations by the Office of Tax Simplification.
£8,500 threshold
The government intends to abolish the £8,500 threshold, meaning all employees will be subject to tax on benefits, while employers will become liable to class 1A National Insurance (NI) on most benefits but will need complete only one return (P11D).
The consultation wishes to explore who will be affected by the reform, what could be done to reduce its effects, and whether particular groups should be offered some protection.
Trivial benefits
HMRC are considering the introduction of a statutory exemption for trivial benefits in kind and what form it should take.
It is intended to cover items such as small non-cash benefits, like a bottle of wine or a bouquet of flowers given occasionally by employer to employee.
The change will remove reporting requirements for employers and mean there will be no liability to class 1A NI for employers or income tax for employees on such benefits.
The consultation looks at the definition of a trivial benefit and whether the exemption should be based on the annual cost or the number of trivial benefits in kind provided in a year.
Voluntary payrolling
A consultation looks at how to support employers who want to account for tax on benefits in kind through payroll instead of reporting them on forms P11D.
Views ARE invited from employers and software developers who already support informal payrolling. This is the first phase; the consultation proposes further work.
Dispensations
A proposed new system means employers will no longer need to apply for a dispensation allowing them to pay specified expenses to their employees without deducting income tax or NI or reporting the payments to the taxman.
They will instead be permitted apply an automatic exemption, provided they can satisfy themselves that the expenses being reimbursed qualify for tax relief in full. The process will be carried out through the employer’s own internal checking and control procedures.
Comments on all four areas must be made no later than 9 September by email or post to HMRC, Room 1E/08, Parliament Street, London, SW1A 2BQ.
In a separate document, the government has published a call for evidence on remuneration practices to inform future tax policy changes. Round-table events will be held as part of the process. More information is available by email.
