Policy News Journal - 2014-15

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Employee Benefits and Expenses – Abolition of the £8,500 threshold for lower paid employment and form P9D

9 September 2014

The CIPP have now submitted their response to the HMRC consultation on the subject of abolishing the £8,500 threshold for lower paid employment and form P9D.

Here is a summary of the key findings in the CIPP response :

 71% of respondents believe their employees will not be affected by the removal of the threshold. The main reason provided was that their employees all earned above £8,500. Nearly 29% said there would be an impact on their employees or organisations they represented;  Charity workers, part-time engineers and low paid volunteers were highlighted as the main employees that would be affected. Not surprisingly the charity sector and engineering were identified as organisations that may be impacted;  The main impact identified on employees affected was a benefit previously given, would now be subject to tax, especially where their earnings were borderline;  Class 1A NICs was identified as the main impact for employers, although one respondent commented by removing the P9D it was be a single process, thus saving time;  Nearly 58% did not consider there to be a principled case for some form of protection for certain groups of employees. The one main reason provided for these views was fairness in the tax system i.e. if one receives a benefit, regardless of earnings it should be taxed equally;  The 42% who felt there should be some form of protection, said this should be for low paid volunteers, with some sort of phasing in as an option for protection. Unfortunately, other than by retaining the P9D, no other solutions were put forward that would avoid or minimise any additional complexity.

Many thanks to all members who replied to our survey and thus contributed to this response.

OTS benefits simplification reforms not likely until 2017

30 September 2014

The Office for Tax Simplification (OTS) is simplifying the way employee benefits and expenses are taxed, but it is now clear that some of the reforms could be unlikely until 2017.

We are grateful to Employee Benefits for this report:

Speaking at Employee Benefits Live 2014 on 24 September John Witting, tax director at OTS, said: “We are looking for opinions and views on issues such as how working patterns have changed and what uncertainties are in the tax system for employers. But the government is committed to simplifying the way benefits are taxed, for example travel and subsistence tax, but reform will be unlikely before 2017.”

Whiting also said he would like the government to see a rule that if the benefit provided to the employee is not an actual benefit to them, then it should not be taxed.

He warned delegates about the recommendations the OTS has made on employee benefits and expenses, which started in August 2014, that while it will simplify benefits tax no change can be promised.

CIPP Policy News Journal

08/04/2015, Page 162 of 521

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