OTS report
says, regardless of whether owned by the employer or through a hotel, it should be included in the P11D dispensation. Very excitingly, the report recommends a review and update of the 490 booklet in conjunction with stakeholders. (I am sure a member of the Policy team will be champing at the bit to get involved with this work!)
A radical solution the OTS says would be to remove the current system and introduce a completely new legislative system whereby all travel and subsistence expenses would be allowable if reimbursed by the employer. The OTS would be interested in reactions to this possible reform, but having tested it during some of their meetings the comments received
...PRINCIPLES BASED DEFINITION OF A TRIVIAL BENEFIT, INCORPORATING A PER ITEM CAP...
CIPP COURSE OF THE MONTH
indicated an interest in considering it properly. The OTS recommended a formal, comprehensive study be carried out on this possible radical change to test the issues further and assess its potential impact. Presumably there would be no impact on those who are self-employed and claiming business related expenses?
One tax, two taxes, Class 1A NICs? Finally, the OTS report looked into two other key areas; continuation of Class 1A NICs and what is taxable.
One recommendation is that Class
1 NICs be applied to all benefits, acknowledging that this would have an impact on employees; but perhaps the NICs rates could be reduced? Another is that a complete and fundamental review of Government policy on what is and what is not taxable, especially looking at whether the policy objectives are still being met. Obviously one consideration is a merger of tax and NICs but as the report suggests this would be a lot of work and has political connotations. (One for after the next election then?)
Another would be a full alignment
of the two systems or, alignment of the underlying definitions of income and expenses (annual and cumulative NICs) or, finally application of Class 1 NICs to all employee remuneration whether cash or benefits in kind. Again a thorough consultation process would be required for the recommendations by the OTS.
And…
As mentioned earlier, the OTS intends to measure its success in these areas purely on the basis of whether there has been a reduction in P11Ds being produced and submitted to HMRC. A high target of 99% reduction by a set date will be their aim. (Let us payroll professionals help them achieve it!) The CIPP is fully supportive of this very comprehensive report and for the most part the recommendations included in it, as many are supported by the previous research conducted by the CIPP and the AAT in response to the interim report. A further report is due that will tackle two areas of extreme complexity, namely: accommodation benefits and termination payments.
PP
P11D, Expenses and Benefits
Taxation of expenses and benefits is a very complex subject and many employers will need to address the value of the benefits they provide to their employees for reporting purposes. This is a very important role within many organisations and if employers do not get this correct HMRC can impose costly penalties and fines for late and incorrect returns.
Any delegates who attend this training course will get a step by step guide on how to calculate all benefits in kind, clear guidance on how to complete the P11D, P9D, P11D(b) forms, clarification of the deadline and guidance of HMRC’s penalties and fines.
Recently some significant changes have been announced therefore it is essential that personnel responsible for this role keep themselves up-to-date with ever-changing legislative to enable organisations to plan for the future and meet their immediate responsibilities.
Some of the recent changes announced
impact the following benefits: l changes to childcare and the restrictions l company cars and fuel l beneficial loans l healthcare l company share schemes. The benefits in kind legislation makes a distinction between two kinds of employee. The categories are: l non-director employees earning less than £8,500 annually (that is, lower-paid employees), and l employees earning above £8,500 annually (including benefits and expenses) and directors. The rules for lower-paid employees in receipt of benefits are slightly different to those for higher-paid employees and directors as many limited benefits are reportable. Where employers provide payments to an employee in a form other than cash, this will normally give rise to a benefit in kind. They must be calculated at their cash-
equivalent value including VAT, with any amount made good by the employee from their taxable pay being a reduction to the reportable and chargeable amount. Tax legislation specifies that expense payments reimbursed to an employee – for example, travel expenses, course fees, business entertainment represents taxable earnings need to be reported on the form P11D. The employee may submit a claim under ITEPA that an expense should not be taxable because it was incurred ‘wholly, exclusively and necessarily’ in the performance of their duties of employment. To avoid unnecessary reporting a dispensation can be applied for. A dispensation is an agreement with HMRC that removes the requirement to report certain expenses on forms P11D. Expenses covered by a dispensation are not liable to tax or Class 1 or Class 1A national insurance contributions.
Book your place at
cipptraining.org.uk PayrollProfessional 21
Payroll basics
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56