Carers ‘benefits in kind’ provisions both wider and narrower than expected! – LITRG Press Release
Campaigners for those on low incomes have welcomed the Government’s announcement today that carers will no longer face a tax charge on the value of their board and lodging. However there is disappointment that the exemption will be limited to this, and will not cover other ‘benefits in kind’ received by carers.
In last week’s Autumn Statement it was announced that the current £8,500 threshold, below which employees do not pay income tax on benefits in kind, would be removed, but that carers would be exempted from the impact of this. The LITRG welcomed this. However the detail of the enacting legislation published today proposes something rather different, exempting the specific benefit that arises when a care and support employer provides their employee with board and lodging such as a bedroom and meals, when they are required to stay over. This is something that LITRG suggested in its response to the consultation document over the summer and will mean the benefit is non-taxable for all carers, not just those on the lowest incomes. However other ‘benefits in kind’ received by low paid carers are now set to become taxable, where the value of income and benefits combined takes the carer over the personal allowance.
Anthony Thomas, LITRG’s chairman, commented:
“We are pleasantly surprised that the Government have recognised that there is a principled case for introducing an outright exemption for board and lodging – meaning that all carers – no matter what their earnings - will face no tax charge on the value of the board and lodging.
“However board and lodging is just one benefit to be affected by the abolition of the £8,500 threshold. Given the fact that Government have extended a broader exemption to other low paid groups (a wider exemptions has been provided for low paid ministers of religion), we might have hoped for a broader exemption for carers too. Close relationships often develop between carers and their employers, so it is not beyond the realms of possibility that carers could also be loaned their employer’s car for a personal reason for example, or be given an expensive hamper at Christmas or have an occasional private expense like a trip to the cinema paid on their behalf. It is also not uncommon for carers to accompany their employer on trips away, or even on holiday.
“The provision of anything like this by an employer to a low paid carer could now result in a potential tax liability for the recipient and a reporting and Class 1A NIC liability for the employer to pay on the value. The new exemption for trivial benefits may be of assistance in some circumstances, but only where the benefit meets the conditions and is under the value of £50.
“While we welcome that action has been taken by the Government to mitigate the effects on vulnerable groups disadvantaged by the reform to the £8,500 benefits and expenses threshold, this isn’t quite what we envisaged when we heard the announcement in the Autumn Statement. We therefore plan to make the appropriate representations."