Draft Finance Bill 2015 – Employee expenses and benefits consultations
LITRG has responded to four HMRC consultations on draft legislation in respect of employee benefits and expenses. The draft legislation has been published as part of the Finance Bill 2015 following HMRC consultations in 2014 concerning proposals made as a result of the Office of Tax Simplification review of employee benefits and expenses.
The £8,500 threshold for lower paid employees will be abolished; while LITRG recognise that this will be a welcome simplification for HMRC and employers, we have successfully argued for a special exemption from income tax and National Insurance contributions to apply to board and lodging for care and support employees. We are pleased that the draft legislation implements this exemption in a clear and simple manner.
LITRG welcomes the draft legislation for a statutory exemption from income tax for trivial benefits. The group believes it meets the objectives, as it is principles-based, brief (with only four principles) and objective. The group is pleased to note that the draft legislation includes the power to uprate the monetary limit (initially £50 including VAT); this should ensure that the exemption continues to be at a reasonable level in the future.
LITRG welcomes the introduction of an exemption for paid or reimbursed expenses, but emphasises the need for clear, accessible and easy to understand guidance for employees. LITRG notes however, that employees who incur qualifying expenses, but who do not received reimbursement from their employer, gain nothing through this change. Therefore the group calls for the process by which employees claim tax relief for qualifying expenses that are not reimbursed to be improved.
The group thinks that voluntary payrolling could cause confusion for some employees, for example, those who change jobs or those with more than one job, as different employers may treat similar benefits differently. It is important that the framework minimises the opportunity for confusions. The group also points out that guidance in respect of voluntary payrolling will need to cover the effects in respect of income tax, National Insurance contributions and also tax credits, Universal Credit and welfare benefits.
The LITRG responses can be found here:
- trivial benefits exemption
- abolition of the £8,500 threshold (including care and support exemption for board and lodging)
- exemption for reimbursed expenses
- voluntary payrolling