Issues from the four consultations employers should be aware of include: Tax on long-service awards needs to be aligned with current employment. OTS recommendation to introduce set amount for trivial benefits, likely to come in next spring. OTS consulting on abolition of £8,500 limit and abolition of dispensations. Voluntary payroll around benefits, with OTS currently in consultation. Whiting said: “We have done a lot of work so far, especially on share schemes. But the frequency of change is the biggest cause of complexity around benefits tax, followed by pay- as-you-earn and national insurance contribution issues. We want the government to take our recommendations and simplify benefits. There are 4.5 million P11Ds done a year by employers, benefits simplification could reduce it to 40,000. “Why should employee benefits be taxed differently to cash?”
Helpful summary of expenses and benefits OTS recommendations and Government responses
12 December 2014
Busy payroll professionals may be forgiven for reeling from the volume of Government documents just issued setting out the detail of the expenses and benefits changes announced in the Autumn Statement. We hope therefore that our summary of the key points will be a welcome time-saver.
Abolishing the P9D
The P9D is to be abolished from April 2016, but with two exceptions:
Ministers of Religion who earn with benefits less than £8,500 will be exempt but will be reportable on a P11D but no Class 1A; Carers who are required to board and lodge with the person being cared for will be except from tax and Class 1A employer NI. Issues clarified: A volunteer is someone who is not an employee nor on an employment contract and therefore not subject to BiKs so there should be no unfairness or effect. Taxi (60 permitted for late night from office) issue raised if under £8,500. Government has rejected this request, and therefore more than 60 taxi journeys are reportable and taxable.
Trivial benefits
Exemption introduced from April 2015, with a limit of £50 per trivial benefit, with no annual cap on number or amount. The legislation will allow future increases in this amount.
The Government will establish the trivial benefit exemption on a principles basis as it is clear that stakeholders agreed that this provides the appropriate framework. The principles are that the benefit: must not be cash or a voucher that is exchangeable for cash. cannot be used in conjunction with any salary sacrifice arrangement or any other contractual obligation. must not be provided to the employee in recognition of particular services performed in the course of the employment or in anticipation of such services.
Detailed clarification issued:
CIPP Policy News Journal
08/04/2015, Page 163 of 521
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