The Office of Tax Simplification (OTS) has identified quick wins to simplify the administration of employee benefits and expenses, nine of which went live in January.
HM Revenue and Customs (HMRC) is to allow reimbursements by employees of fuel used for private motoring or in a company car made after the end of the tax year, but before 6 July, to be taken into account through online adjustments. Also, employers will again be able to use form P46 when a company car is replaced.
As well as better cross referencing of its website, HMRC is publishing improved guidance this month on: qualifying subsistence expenses and allowable expenses; the availability of pay-as-you-earn settlement agreements (PSAs) and dispensations and the online application process; and covering overseas and non-domiciled employees within a PSA and standard items (and related conditions) that can qualify for dispensations.
HMRC has already begun allowing employers to adjust benefits returned on P11Ds and resubmit these online.
The OTS has suggested that HMRC publish a list of employments where it is customary to get tax-free accommodation and a list of benefits which it considers to be trivial. Some details on trivial benefits are already available, but both specific lists, to be published in this Parliament, would give further clarity.
It’s unlikely, however, that HMRC will want to set a precedent by agreeing to publish any financial limits it uses.
Further ahead, HMRC has confirmed it is considering allowing voluntary payrolling of benefits in place of reporting on P11D, with HMRC and the OTS exploring what changes can be phased in alongside any legislative changes required.
Overall, a good start. Let’s hope the OTS is equally successful as its focus turns to employee travel and subsistence issues.
Shawn Healy is a tax principal at BDO.