On 22nd February 2016, HMRC published their updated Booklet 480 “Expenses and benefits: A tax guide”. The biggest change in this new edition of Booklet 480 is the removal of dispensations and the introduction of exemptions in its place. Below is a list of changes within Booklet 480, the 2016 edition, compared to Booklet 480, the 2015 edition;
- Chapter 1 (Legal background) has been altered. From 2016 – 2017 the benefits code applies to directors and employees. Up to 5th April 2016 the benefits code applied only to “directors and certain other persons in controlling positions whatever their remuneration, but not to certain full-time working directors and certain directors of charities and non-profit making concerns.” In this regard, there is no longer exclusions of certain directors. There is no longer the “lower-paid employment” exclusion threshold of £8,500 in relation to the benefits code. This stops the confusion of determining whether employees are below or above the threshold when deciding whether to report benefits in kind on Form P11D or P9D.
- Chapter 2 is now “Exemption for paid or reimbursed expenses”, whereas it used to be “Dispensation”, following the removal of dispensations. This explains that dispensations cease to exist and that there is now an exemption for expenses that might have previously been covered by a dispensation. The exemption does not apply to expenses or benefits that are paid under a salary sacrifice arrangement. View our news article on the changes here.
- Chapter 5 (Non-taxable payments and benefits) has the introduction of new section “Carers board and lodging” in relation to a tax exemption for board and lodging provided to carers in the home of the person they are employed to care for.
- Chapter 7 (Deductions for expenses) clarifies that where an expense is not covered by the new exemption for paid/reimbursed expenses, described in Chapter 2, the employee is entitled to a deduction for any other expenses which are incurred wholly, exclusively and necessarily in the performance of the duties of employment.
- A new paragraph has been inserted into Chapter 8 (Travelling and subsistence expenses) stating there are changes to the tax treatment of business travel by employees for workers providing their services through intermediaries and who are subject to supervision, direction or control. This is referring to section 339A of ITEPA.
- Chapter 11 (Cars and Vans available for private use – when a benefit charge is incurred). Paragraph 11.9 clarifies who is included as the members of an employee’s family or household for the purposes of an employee having a vehicle made available by an employer.
- Chapter 14 (vans available for private use) introduces that vans available for private use with a CO2 emission of nil will now be classified as a taxable benefit, increasing from now up to 2020.
- Chapter 16 (Mileage Payments and passenger payments) - HMRC have added emphasis that mileage payments can be made in respect of electric cars and vans. They have also added that payments in excess of the mileage allowance payments should be reported on P11Ds (or P9Ds for 2015 to 2016). This is because P9Ds will cease to exist in future years.
- Chapter 20 (Entertaining expenses) - Paragraph 20.4 has been amended to reflect that reasonable entertaining expenses incurred at genuine business occasions will be covered by the exemption detailed in Chapter 2, as opposed to being covered by a dispensation. .
A link to the full booklet can be found here.