Request a Quote

Request a Quote

Please complete the form below, we’d love to hear from you!

Tax to be less taxing for employees

There was good news for employers this week as HMRC set out its plans to simplify the taxation of employee benefits and exemptions. The proposals, which should be in place from April next year, are summarised below.

  • The abolition of the £8,500 threshold for the taxation of benefits in kind (BIKs).
    At first sight, this looks like a backward step. At present, employees who earn less than £8,500 are not taxed on BIKs provided by their employer; if you remove the threshold then those benefits will be taxable. However, the recent increases in the personal allowance (which now stands at £10,000) should mean that no tax is due. Removing what is now a largely pointless threshold will simplify the reporting of benefits and expenses for employers, meaning that only one return (form P11D) will be required for all employees with BIKs.
  • The introduction of an exemption for trivial benefits.
    Under the proposals,employers will be able to make small one-off non-cash gifts to employees (for example, a bottle of wine to reward a job well done or a bouquet of flowers to mark a special occasion) without having to worry about the tax consequences.
  • The introduction of an exemption for paid or reimbursed expenses.
    Under the rules currently in force, an employer who pays or reimburses expenses incurred by an employee in the course of the employee's duties must report those
    expenses to HMRC. The employee must then separately claim tax relief in respect
    of those expenses. This situation can be avoided if the employer applies for and is granted a dispensation by HMRC. However, not all employers do this and many of those that do fail to update the dispensation when circumstances change. This is not a good situation and HMRC's proposed solution - to replace the current dispensation system with an exemption for qualifying expenses - should make things a lot simpler for employers and employees.
  • The voluntary payrolling of BIKs and expenses.
    Under these proposals, the employer would have the option of reporting certain BIKs and expenses through the payroll rather than on the end of year form P11D. This has two advantages. Firstly, it will reduce the admin burden for employers. Secondly, it will reduce the risk of insufficient tax being collected through PAYE, making it less likely that employees will receive a surprise tax demand after the end of the tax year.

And it doesn't end there. HMRC will also consider changes to the taxation of travel and subsistence expenses, rules which it recognises are "a cause of error, misunderstanding and concern for employers". Now if HMRC can sort that mess out that will be good news indeed.

Next Event / Workshop

PULSE Live London 2020

Pulse LIVE London 2020 will be taking place on 24-25 March 2020 at Olympia London. Our specialists will be there to add...

  • BW Medical Accountants have a good working knowledge of General Practice and are keenly aware of the challenges Practices face within the changing environment of the NHS.  Benfield Park have been very impressed by the way BW Medical continue to deliver the range of services they provide from Accounts to Tax and NHS Pension advice. 

    We have found Practice consultation and engagement from BW Medical specifically helpful to shape the future of the Practice.

    Senior Partner
    Benfield Park Medical Group, Newcastle
  • We had no hesitation in moving to BW Medical Accountants.  For any business your accountant is integral, and for us one of the most important factors to this relationship is to have a personal and trusting approach, which BW have undoubtedly achieved. 

    The service we receive and the interest they show in our practice assures us that they have a genuine interest in us and commitment to us.  More importantly they are always helpful and polite to answer even the dumbest of questions!  They give us confidence and reassurance knowing that they are always very up-to-date with all the numerous changes within general practice and we would have no hesitation in recommending them to other practices seeking a professional and personal accountancy service.

    Jackie Rotherham, Practice Manager
    The James Street Family Practice, Lincolnshire
  • We changed to BW Medical Accountants and I would say we have just had the most transparent and understandable end of year meeting and the best planning advice I have ever had in 16 years of practice.

    GP Partner
    Cumbria

Newsletter Signup

Loading...