Government to call for evidence on taxation of benefits in kind

Spring Budget 2017: The government is to publish a call for evidence on exemptions and valuation methodology for the income tax and employer national insurance contribution (NIC) treatment of benefits in kind.

The government announced its intention to call for evidence on this issue in the Autumn Statement 2016, and reconfirmed its commitment to doing so in the Spring Budget 2017 policy paper.

The call for evidence seeks to enable the government to better understand whether the use of benefits in kind can be made fairer and more consistent in terms of tax treatment.

In the Autumn Statement 2016, the government confirmed that it will limit the income tax and employer NIC advantages where benefits are offered through a salary sacrifice arrangement or where the employee is provided with a choice between a benefit in kind (BIK) and cash allowance. Draft legislation was published on 5 December 2016, with final legislation due to be introduced in the Finance Bill 2017.

Susan Ball, head of employers advisory at Crowe Clark Whitehill, said: “Government says that employers can choose to remunerate their employees in a range of different ways, but the tax system treats these different forms of remuneration inconsistently. We have already in the Finance Bill 2017 changes to operational remuneration and salary sacrifice which will impact many from April 2017 and, as yet, none of the much-needed clarifications on the draft Finance Bill.

“What is clear is that government [is] moving towards a complete review of the taxation system of expenses and benefit for employees and officeholders, with announcements on the two calls for evidence at the same time as publishing the long-awaited consultation on the proposed changes to the tax treatment of employer-provided accommodation.”