15 March 2015    |    Taxation, Payroll

Benefits and expenses tax reform

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.

This means:

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.

P11d

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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