Government to go ahead with OTS benefits simplification reforms

Review of benefits tax

Autumn Statement 2014: The government has confirmed that it will go ahead with the Office Of Tax Simplification’s (OTS) recommendations and reform the rules for employee benefits and expenses.

It has accepted 51 of the 58 recommendations made by the OTS.

The proposals will make the taxation of benefits and expenses more straightforward and effective, helping to reduce administrative burdens on employers by an estimated £20 million a year.

It has also announced that, from April 2015, the government will provide a statutory exemption for trivial benefits in kind costing less than £50.

In addition, from April 2016, the government will remove the £8,500 threshold below which employees do not pay income tax on certain benefits in kind.

It will be replaced with new exemptions for carers and for ministers of religion. It will also exempt certain reimbursed expenses and introduce a statutory framework for voluntary payrolling.

The government will also stop tax relief being claimed on reimbursed business expenses when they are paid in conjunction with a salary sacrifice arrangement.

Alastair Kendrick, tax director at MHA MacIntyre Hudson, said: “We welcome the commitment of the government to implement many of the recommendations of the OTS but surely we want to know when these changes will take place. 

“The £50 exemption for minor benefits is mean and I expected it to be higher. We expect the taxing of benefits via payroll to be welcomed. 

“The salary sacrifice on travel and subsistence is interesting and will hit those which engage workers via a umbrella provider. It may see the end of such arrangements.”