15 March 2015 | Taxation, Payroll
Radical changes to the beneﬁts and expenses rules have been announced. What are they and when will they come into effect?
The current rules for taxing and declaring beneﬁts and expenses have been criticised as over-complicated for years. In 2014 the Ofﬁce of Tax Simpliﬁcation took on the task of coming up with a better alternative. The government announced in the 2014 Autumn Statement
that it would go ahead with most of the suggestions.
The £8,500 earnings threshold for lower paid employees below which there are special rules for the taxation of beneﬁts in kind
will be abolished with effect from 6 April 2016.
Also from 6 April 2016 business expenses reimbursed to employees will be exempt from tax and NI. This will only
apply where the employee would be entitled to claim them as tax deductible had they not been reimbursed. Consequently, employers will
not be required to report the expenses on Form P11D. This will be welcome news for many businesses.
The changes apply from 6 April 2016.
Their main effect is to reduce the P11D reporting requirements of expenses from which employees gain no personal beneﬁt, and to exempt benefits in kind worth up to £50.
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