General Expenses, Benefits & Reward News
HM Treasury calls for evidence on employee expenses 22 March 2017
As announced in the autumn statement and detailed in the Spring Budget HM Treasury have a published a call for evidence to help them better understand why there has been a 25% increase in claims between 2009-10 and 2014-15.
The treatment of self-employed expenses is out of scope of this call for evidence .
The main objectives of the call for evidence are to help HMRC better understand:
If the current rules or their administration can be clearer and simpler. The Office of Tax Simplification’s (OTS) review of employee benefits and expenses recommended a policy review of the expenses system to re- establish some general principles and ensure these are in line with current employment practices and government policies. Whether the tax rules for expenses are fit for purpose in the modern economy. There have been major changes in working practices in recent decades, and the main principles behind the current tax rules for expenses were introduced in the mid-nineteenth century, this call for evidence will help to establish whether they remain fit for purpose. Why the cost to the exchequer of the tax relief for expenses which are not reimbursed has increased? HMRC has limited data to explain the reasons behind the 25% increase in claims but wants to understand what drives the cost of this relief to understand the impact on the exchequer over time and ensure the relief is being used in the way it was intended.
Views are invited in the call for evidence from anyone with an interest in employee expenses but particularly employers and employees who use the tax relief across all sectors and employer size, and tax professionals and advisors.
Respondents may want to draw directly from their own experience and a wider understanding of practices in different sectors. Respondents should feel free to provide broad evidence or answer specific questions. The government is particularly interested in quantitative data where possible on:
current employer practices on employee expenses current tax rules on employee expenses the future of employee expenses.
This call for evidence includes 17 questions and will close 12 June 2017.
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Tax exemption on employer provided pension advice 27 March 2017
HMRC recently published guidance to help employers understand the exemption from charge where an employee is provided with pensions advice provided by their employer.
Pensions information and advice provided by an employer to employees generally is unlikely to give rise to an employee benefit tax charge and using an HMRC provided example this would include a presentation to which all employees are invited to attend. However, where an employer pays fees to an external provider for one-to-one sessions to provide advice to employees, as a general principle, a tax charge will arise on the cost of the advice as this represents an employment- related benefit.
With effect from 6 April 2017 a new Income Tax exemption will be available to cover the first £500 worth of relevant pensions advice provided to an employee.
The published update explains HMRC’s approach to pensions advice up to 5 April 2016 i.e. Employment Income Manual EIM21802 and for tax years 2017 onwards Employment Income Manual EIM21803.
The Employment Income Manual will be updated once the Finance Bill 2017 receives Royal Assent.
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