Policy News Journal - 2016-17

The Chartered Institute of Payroll Professionals ……………………………………………………………Policy News Journal

For more detailed information please see our guidance – Exemption for amounts which would otherwise be deductible .

Further information relating to the end of year reporting of expenses and benefits, including how to deal with items that have not been reported via payroll during the year, will be published in the February edition of Employer Bulletin.

This information was published in the Employer Bulletin: October 2016 .

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Expenses and Benefits - have you sent HMRC a NIL return? 25 October 2016

HMRC have sought to remind employers and agents about the importance of submitting a NIL return where they have received a P11D(b) reminder letter.

Issue 62 of Employer Bulletin highlights that if you have been sent a P11D(b) or P11D(b) reminder letter from HMRC but haven’t provided any expenses or benefits to anyone, then it is important not to ignore the reminder but to use the online service to inform HMRC that you don’t owe Class 1A National Insurance. If you are an Agent, you can email HMRC using an online form to inform HMRC that your client doesn’t owe Class 1A National Insurance.

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OTS response to consultation on Salary Sacrifice and BiKs 14 November 2016

The OTS suggest in their response that it would be better to reform Benefits in Kind (BiKs) so that it is fully within NICs.

The focus of the Office for Tax Simplification (OTS) is on simplification of the tax system. That encompasses two broad arms: technical simplification (simplifying the legislation and rules) and administrative simplifications (making the tax system easier to deal with). According to the OTS the underlying principle behind the consultation on salary sacrifice for the provision of benefits in kind is a policy that everyone should pay the same amount of income tax (IT) and National Insurance contributions (NICs) on the same remuneration package. From the OTS’s point of view, that is a simple result, not least because it will be readily understood. Historically, BiKs have not generally been charged to NICs, though the employer NIC charge via Class 1A is now well established. In the OTS’s report on the Closer Alignment of IT and NICs , published in March 2016, the OTS put forward a seven-stage programme for reform which included bringing BiKs fully into the NIC ambit. Although that is on the surface an increase in taxation on those in receipt of benefits the OTS found strong support from those they spoke to for such a move. The OTS noted that the position of their wide variety of stakeholders seems to have changed over the last three years. Most now see the exclusion of BiKs from employee NICs as an anomaly that gives such recipients an unfair advantage compared with those who simply receive cash pay and fund their own benefits. However, this consultation tackles only one aspect of the rules around BiKs, where HMRC believes that the rules significantly undervalue the BiKs. From a simplification point of view the OTS suggest it would instead be better to reform the whole area in one go . However, they do acknowledge that their reform programme around IT/NICs is a long term project and HMRC must be free to tackle problems with the system in the meantime.

Read the OTS’s full response to the consultation on salary sacrifice for the provision of benefits in kind

CIPP comment We anticipate that the response from government will be published after the Autumn Statement next week (23


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