Tax on benefits-in-kind should be equal

More than three-quarters (81%) of respondents said benefits-in-kind should all be taxed at the same rate, according to research by the Chartered Institute of Payroll Professionals (CIPP) and the Association of Accounting Technicians (AAT).

The research, which surveyed payroll and accountancy professionals, is in response to an Office of Tax Simplification (OTS) report, which was published in August 2013, that reviewed the tax rules around employee benefits and expenses.

The research found that almost two-thirds (61%) of respondents supported benefits being taxed at the same rate provided a proper review was undertaken and the rate was fair.

It also found:

  • Abolition of Class 1A NICs was supported by just over 50% of respondents.
  • 68% of respondents thought a review was needed into benefits-in-kind tax.
  • More than two-thirds said the government should also review the fairness between the treatment of employed and self-employed employees, related to the tax system.
  • Few respondents supported benefits being viewed as cash, because it would lead to employers replacing benefits with pay.

The respondents also agreed that some benefits should not be taxable, the most common being any form of healthcare benefit.

Karen Thomson (pictured), associate director of policy, research and strategic visibility at the CIPP, said: “Both CIPP and AAT overall support the findings of the OTS report and we are both willing to support the OTS in its future work, influencing government to implement their recommendations and with further consultation.”