payrollnews
Benefits and expenses THE OFFICE of Tax Simplification (OTS) has published the document Review of employee benefits and expenses: second report which sets out recommendations on how to simplify and streamline the complex system for reporting and taxing such employee benefits and expenses. The 91-page report can be found at:
www.gov.uk/government/uploads/system/uploads/ attachment_data/file/275795/PU1616_OTS_employee_ benefits_final_report.pdf. The report builds on an interim OTS report published summer
2013 which set out a series of ‘quick wins’. These included: l streamlining the cycle to work scheme l aligning tax and national insurance contributions (NICs) treatment of mileage rates over 45p l changes to HMRC forms, and l publishing a list of items that automatically qualify for a ‘dispensation’ (meaning no benefit will arise for employees). The later report – which seeks to simplify benefits and expenses for four million employees and 300,000 employers – sets out a number of ways to make the reporting of expenses and benefits easier for both employer and employee. It includes over twenty proposals to simplify the process, such as: l introducing a legislative framework to permit employers to payroll some or all of their benefits and expenses on a voluntary basis l widening the scope of PSAs to permit employers to settle any tax liability on benefits and expenses l adding an exemption to the legislation for qualifying business expenses paid for or reimbursed by an employer l abolishing the £8,500 threshold, but with some simple mitigating steps to help some of those affected
And, briefly… l List 3 updated – The list of professional
bodies and learned societies approved by HMRC for the purposes of deduction for fees and subscriptions paid to professional bodies or learned societies has been updated (www.
hmrc.gov.uk/list3/index.htm). l RDR3 updated – HMRC has released an updated version of the RDR3 guide: Guidance Note: Statutory Residence Test (SRT) (www.
hmrc.gov.uk/international/rdr3.pdf). l Call handling – HMRC’s 2013/14 half- yearly performance report reveals that from April to September 2013, 72.7 per cent of all call attempts were handled. Though this is an improvement on the same period last year, it is below HMRC’s 90 per cent target. l LGPS 2014 – Online versions of the Local Government Pension Scheme (LGPS) Payroll Guide to LGPS 2014 and of the HR Guide to LGPS 2014 are available on
www.lgpsregs.org. l Car and fuel calculator – HMRC has updated its online company car and car fuel benefit calculator to include calculations for tax year 2014/15 (
http://cccfcalculator.hmrc.gov. uk/
CCF0.aspx).
l redefining in law a short, easy to understand ‘principles based’ definition of a trivial benefit, incorporating a per item cap (e.g. £50) l implementing a specific code for homeworkers with one clear definition of homeworking for all tax purposes l clearer rules on the definitions of workplaces, ensuring employees only have one permanent place of work. The OTS also sets out two areas for longer term study:
l moving NICs and income tax closer together, including harmonising definitions and modernising NICs calculations l a fundamental policy review as to what is and what is not a taxable benefit, taking into account today’s working practices. The OTS envisages that some of the recommendations are likely to be taken forward as part of the Budget 2014 process, whilst others are longer term issues to be taken forward in the next parliament. John Whiting, Tax director of the OTS, said: “We have listened to those that use the system – employers, agents and HM Revenue and Customs staff – and there is a lot of scope to simplify and streamline the current system. We can get some real simplification wins with some sensible changes to what counts as a benefit and how it is taxed, together with some modernising of the rules around travel and subsistence. “We believe the recommendations we have made better reflects today’s working practices. Our quick wins will help, but the bigger work will begin to fundamentally change the way benefits and expenses are reported, making it easier for everyone. There is a big target here: the 4.5 million P11Ds completed annually, which we think could be reduced by 90 per cent or more.”
Payroll giving
IN SEPTEMBER 2013, HM Treasury published Payroll Giving: Summary of responses, which summarises the responses received and how they have informed a new approach to the government’s support for payroll giving.
One of the key actions set out was to reduce the maximum time payroll giving agencies have for disbursing donations. The reduction in the time period – from sixty to 35 days – in which an approved agency must make payment to a charity where, at the time of its receipt the agency knows the identity of the employee making the donation and the charity to which the donation is made, supports the government’s objective of increasing charitable giving through the scheme because of the cash-flow benefit it will provide to charities. To accommodate practical problems arising where an agency has made no payment to the charity specified in the twelve months immediately preceding receipt of a donation, an approved agency may extend the 35-day period to sixty days. Draft regulations have recently been laid but no date has been given when they will come into force. For further information visit:
www.hmrc.gov.uk/drafts/charitable- deductions.htm.
PayrollProfessional 17
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