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30.01.14 OTS Publish their ‘Review of Employee Benefits and Expenses: Second Report’

30 January 2014


The Office for Tax Simplification (OTS) has recently published its “Review of employee benefits and expenses:  Second report”.

The report follows on from the interim report launched in August 2013 which set out a series of quick wins. The recommendations of this second report are as follows;

Recommendations

1. Introduce a legislative framework to permit employers to payroll some or all of their benefits and expenses on a voluntary basis.

2. The scope of PAYE Settlement Agreements should be widened to permit employers to settle any tax liability on benefits and expenses.

3. An exemption is added to the dispensation legislation for qualifying business expenses paid for or reimbursed by an employer. 

4. The £8,500 threshold should be abolished in regards to benefits in kind.

5. Redefining in law a short, easy to understand ‘principles based’ definition of a trivial benefit, incorporating a per item cap. Apply a limit for trivial expenses – anything under £50 will not need to be taxed.

6. Explore further the case for applying Class 1 NICs to all employee remuneration (whether cash or benefits in kind.)

7. Have a rule that says an employee can only have one permanent workplace, which is where they spend the greatest part of their working time.

8. Amend Section 339 ITEPA 2003 to redefine ‘permanent’ and ‘temporary’ workplace and introduce a statutory percentage test, probably at 30%. 

9. Remove the facility for employees to claim the cost of expenses in working from home, but provide an uplifted homeworking allowance. 

10. Longer term studies of moving NICs and Income Tax closer together, including harmonising definitions and modernising NIC calculations. 

11. A fundamental review of the Government policy on what is and what is not a taxable benefit. 

The report will be submitted to the Chancellor and Treasury Ministers for their consideration and decision on how to proceed.

For a full copy of the report click here.

See our previous news articles on this topic;

22.04.13 OTS Review of Travel and Subsistence Expenses 

22.08.13 OTS Interim Report is Published