Office of Tax Simplification recommends retention of tax relief on childcare, bikes and green cars, but not on EAPs

The independent Office of Tax Simplification has presented its ‘Review of tax reliefs’ report to the Chancellor.

After an interim report was published in December 2010, the Office of Tax Simplification received comments and feedback from taxpayers, advisers, HM Revenue and Customs, HM Treasury. and other interested bodies. The new report includes evidence gathered through a consultative committee, and views from stakeholders.

One of the key themes that emerged was employee benefits and expenses. The longer-term aim, according to the report, is to align the treatment of employee benefits with shorter-term aims of simplifying many minor benefits with a minimum limit of £100/£500, or amending the current £8,500 threshold.

It has also recommended that the tax relief on employer-supported childcare vouchers and bikes-for-work schemes should be retained.

However, as the tax relief benefit on employee assistance programmes (EAPs) is negligible the report states: “we recommend that this relief be abolished, and as an alternative, consideration could be given to replacing it with a de minimis level for benefits.”

The 100% first year allowance for cars with low CO2 emissions is due to be reviewed in 2013 when the current scheme expires. The review recommends that the relief be retained although it says that thought could be given to once again lowering the qualifying criteria to encourage both businesses to use greener cars and manufacturers to develop them.

It also recommends that life assurance premium relief to individuals whose employers make
payments into an E-FRBs scheme be be abolished.

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A formal response is expected from the Chancellor as part of the 2011 budget on 23 March.

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