A fundamental policy review as to what is and what isn’t a taxable benefit, taking into account today’s working practices.
John Whiting, Tax Director of the Office of Tax Simplification, said:
“We have listened to those that use the system – employers, agents and HM Revenue and Customs staff – and there is a lot of scope to simplify and streamline the current system. We can get some real simplification wins with some sensible changes to what counts as a benefit and how it is taxed, together with some modernising of the rules around travel and subsistence. “We believe the recommendations we have made better reflects today’s working practices. Our quick wins will help, but the bigger work will begin to fundamentally change the way benefits and expenses are reported, making it easier for everyone. There is a big target here: the 4.5 million P11Ds completed annually, which we think could be reduced by 90 per cent or more.” The report builds on an interim OTS report published last summer which set out a series of quick wins. These included: streamlining the cycle to work scheme; aligning tax and NIC treatment of mileage rates over 45p; changes to HMRC forms; and, publishing a list of items that automatically qualify for a ‘dispensation’ (meaning no benefit will arise for employees).
The Policy team will be reviewing the ‘91 page' report and will provide a summary on the detail shortly.
OTS review of employee benefits and expenses – second report
28 March 2014
At the end of January the Office of Tax Simplification (OTS) published a report with a set of recommendations on how to simplify and streamline the complex system for reporting and taxing employee benefits and expenses. The CIPP policy team has digested the 91 page report and was interested to see the OTS’s aims are to reduce P11Ds by 99% which is a mammoth task. If the government/HMRC/HMT are brave enough to implement their recommendations, we really could see a reduction in burdens in respect of form filling. The CIPP has for many years lobbied for payrolling and has produced research papers in the past. Each time the majority of the payroll profession has said, get rid of P11Ds and put through the payroll . There are a number of radical suggestions too, such as Class 1A monthly but then even going as far to say remove Class 1A and make Class 1 on all benefits, with a possible reduction in the percentage rate of course. The only concern we have at the CIPP in respect of the payrolling recommendation is that it would be voluntary and start perhaps with just some benefits. We understand the reason for voluntary and accept the OTS’s observations that as payrolling becomes the “norm” more will do it anyway. However we do have concerns for the employee having multiple employments or just moving between jobs and there being different practices in operation. We would also encourage HMRC/HMT etc. to look at the way in which benefits are calculated to ensure all benefits in kind can go through the payroll if the employer chooses rather than just some because not all are a good fit. However if of course all are subject to Class 1NICs and there is a change in the rules for them to be annual etc. then this might solve the problem as it wouldn’t need to be NICs at the time of receiving the benefit as it were.
CIPP Policy News Journal
16/04/2014, Page 43 of 519
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