ICAS response to HMRC's review of employee benefits and expenses

ICAS has submitted its response to the consultation issued by HMRC on "Review of employee benefits and expenses – draft legislation".

Key points:

  • Draft legislation to implement payrolling of certain benefits from 6 April 2016
  • Follows recommendations from Office of Taxation Simplification (OTS)
  • Change is not comprehensive – P11D(b) still required and not all benefits can be payrolled

Published:
1 September 2015

ICAS response to HMRC consultation

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The consultation covers the draft regulations to introduce changes to the PAYE system as follows:

  • Removing the requirement to make returns on P9D for employees earning less than £8,500
  • Introducing the payrolling of certain benefits and removing the requirement for an employer to make annual returns for each employee they provide a benefit to
  • Setting out the approved rates under the new exemption for qualifying business expenses
  • Removing the requirement for employers to report expenses paid to employees on form P11D at the end of the year

ICAS has made a number of points in its response to HMRC:

  • The proposals do not reflect all the proposals made by the OTS in January 2014
  • The changes reflect only the PAYE position on payrolling certain benefits and do not address the Class 1A NIC position.  Employers will still be required to submit forms P11D(b) to notify the Class 1A liability.
  • The changes do not require an employer to provide details to an employee of the amount of benefits that have been included in payroll.  This gives individuals less visibility of their tax position and will not be effective at helping them to manage their online tax account.
  • It is vital that the HMRC systems are aligned so that where an employer payrolls a benefit it is linked to the notice of coding issued to the employee.
  • The payrolling regulations exclude beneficial loans, accommodation, credit vouchers and tokens.

Topics

  • Consultations and responses
  • Tax

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