Simplicity knocks! Government should jump at chance to cut admin around employee benefits
The Chartered Institute of Taxation (CIOT) has given an enthusiastic welcome to recommendations from the Office of Tax Simplification (OTS) that could drastically cut administrative burdens for employers, by making it much easier for them to process employee benefits and expenses.
The OTS recommendations are the result of a detailed review into employee benefits and expenses published today.1
Colin Ben-Nathan, Chairman of the CIOT’s Employment Taxes Sub-Committee, commented:
“We welcome this report. It contains many excellent recommendations which we believe should be given careful consideration by Government with a view to action as soon as possible. Employers are subject to a cumbersome system for the reporting of employee benefits and expenses and its streamlining should be regarded as a high priority. Certainly, with an aim of reducing P11Ds forms by 99% the OTS cannot be accused of lacking ambition!
“We agree that making it easier for employers to process more benefits via the monthly payroll would substantially reduce the number of P11D forms that employers need to submit. P11Ds are an annual return of taxable benefits and expenses for each employee, and long viewed as a major burden on employers. Additionally, increasing the number of items that can be covered by a PAYE Settlement Agreement (PSA) would be of significant benefit to employers by enabling them to account for tax and national insurance direct with HMRC rather than having to process items separately for each employee.
“The report also recommends a specific code for home-working. We consider this is definitely the right approach when an increasing number of people are working from home. And an increased flat-rate home-working allowance would give greater certainty and less complication to those choosing this option.
“Finally, we are encouraged by the OTS proposal to end the situation where employers face two different tax reporting regimes for benefits and expenses, dependent on whether or not an employee’s earnings in a particular employment exceed the ‘£8,500 threshold’. This threshold was last increased in 1979 and was originally designed to distinguish those who were paying tax at higher rates from those who were not – it has indeed long passed its sell by date! That said, we echo the OTS in cautioning that there are outstanding issues to address with regards to benefits provided to low-paid workers, for example in the charity sector.
“Overall this OTS report contains many excellent recommendations to reduce the administrative burden all round for employers, employees and HMRC alike and we hope the Government will consider them carefully with a view to taking action as soon as possible.”
Notes for editors
1. The Office of Tax Simplification’s publication, Review of employee benefits and expenses: second report, can be read here.
2. The Chartered Institute of Taxation
The Chartered Institute of Taxation (CIOT) is the leading professional body in the United Kingdom concerned solely with taxation. The CIOT is an educational charity, promoting education and study of the administration and practice of taxation. One of our key aims is to work for a better, more efficient, tax system for all affected by it – taxpayers, their advisers and the authorities. The CIOT’s work covers all aspects of taxation, including direct and indirect taxes and duties. Through our Low Incomes Tax Reform Group (LITRG), the CIOT has a particular focus on improving the tax system, including tax credits and benefits, for the unrepresented taxpayer.
The CIOT draws on our members’ experience in private practice, commerce and industry, government and academia to improve tax administration and propose and explain how tax policy objectives can most effectively be achieved. We also link to, and draw on, similar leading professional tax bodies in other countries. The CIOT’s comments and recommendations on tax issues are made in line with our charitable objectives: we are politically neutral in our work.
The CIOT’s 17,000 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’, to represent the leading tax qualification.
Contact: James Knell on 020 7340 2701 or George Crozier on 020 7340 0569 or 07740 477374.
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