The CIOT has published a number of proposals for consideration ahead of the 27 October 2021 Budget covering the following:
On employment taxes and pensions, the CIOT suggests:
Introduction of a specific deduction for the extra cost of working from home (WFH) for expenses incurred by an employee that are not reimbursed by the employer.
Review of the existing exemptions and deductions for employee travel expenses where an employee works from home (either full or part-time) and occasionally travels to their employer’s premises in the new era of hybrid WFH arrangements.
Amending the trivial benefits exemption so that employer reimbursements have the same tax treatment as directly provided employer benefits (eg, an employer reimbursing an employee for a flu jab should be treated as trivial rather than taxable benefit).
Amending the legislation to treat ex-gratia payments by employers on the death of an employee by ‘natural’ causes in the same way as an equivalent payment on the ‘accidental’ death of an employee.
Enhancing the enterprise management incentives (EMI) eligibility criteria to help businesses recover and grow post-pandemic.
Rectification of anomalies in the pensions tax regime for taxing lump sums from pension schemes.
Improving pension scheme administration by fixing problems with scheme block transfers.
Reviewing the Money Purchase Annual Allowance (MPAA) rules to allow individuals who have had to access their pension savings during the pandemic to recommence saving for their retirement without the contribution restrictions imposed by the MPAA.
The CIOT is concerned about individuals who have entered into arrangements that are subject to the loan charge and are now being asked to repay the loan by organisations which claim to own or control the loans. It recommends that the government considers introducing legislation to prevent assignment and/or enforcement of these loans by including a 100% tax charge on any proceeds or profits arising from such activities, the imposition of penalties on assignors/assignees, or (looking beyond simply tax measures) legislating to make such loans unenforceable as contrary to public policy.
The CIOT also recommends that the government consider an early high-level consultation on the implications of remote working abroad, covering:
complexities of managing employees in another jurisdiction including, from a tax perspective, possible social security and withholding/reporting obligations in the remote jurisdiction; and
additional reporting obligations for companies having a corporate tax liability on the chargeable profits made by the permanent establishment for employees working in that country.
The CIOT also repeats a request made last month (see Tax Journal, 24 September) for the government to review the taxation of employee ownership trusts (EOTs) to encourage take-up and discourage their abuse.
Pete Miller, chair of the CIOT’s Owner Managed Business Committee, said that there was clear support for the EOT tax regime but ‘removing unnecessary costs from the process of transferring a company into employee ownership should be a priority’.
‘We are also concerned that some advisers seem to be recommending EOTs as a tax planning measure without any real commitment to employee engagement, he said.
‘In particular, we have heard of advisors recommending EOTs simply as an interim tax-saving step where the intention is, in the relatively short term afterwards, to sell off or float the company. This suggests a lack of genuine commitment to employee engagement,’ Miller said. ‘We think it is worth exploring ways to guard against this outcome and the consequent loss of tax revenue. One option would be to require EOTs to be resident in the UK as a condition of accessing the favourable tax treatment.’
The CIOT has published a number of proposals for consideration ahead of the 27 October 2021 Budget covering the following:
On employment taxes and pensions, the CIOT suggests:
Introduction of a specific deduction for the extra cost of working from home (WFH) for expenses incurred by an employee that are not reimbursed by the employer.
Review of the existing exemptions and deductions for employee travel expenses where an employee works from home (either full or part-time) and occasionally travels to their employer’s premises in the new era of hybrid WFH arrangements.
Amending the trivial benefits exemption so that employer reimbursements have the same tax treatment as directly provided employer benefits (eg, an employer reimbursing an employee for a flu jab should be treated as trivial rather than taxable benefit).
Amending the legislation to treat ex-gratia payments by employers on the death of an employee by ‘natural’ causes in the same way as an equivalent payment on the ‘accidental’ death of an employee.
Enhancing the enterprise management incentives (EMI) eligibility criteria to help businesses recover and grow post-pandemic.
Rectification of anomalies in the pensions tax regime for taxing lump sums from pension schemes.
Improving pension scheme administration by fixing problems with scheme block transfers.
Reviewing the Money Purchase Annual Allowance (MPAA) rules to allow individuals who have had to access their pension savings during the pandemic to recommence saving for their retirement without the contribution restrictions imposed by the MPAA.
The CIOT is concerned about individuals who have entered into arrangements that are subject to the loan charge and are now being asked to repay the loan by organisations which claim to own or control the loans. It recommends that the government considers introducing legislation to prevent assignment and/or enforcement of these loans by including a 100% tax charge on any proceeds or profits arising from such activities, the imposition of penalties on assignors/assignees, or (looking beyond simply tax measures) legislating to make such loans unenforceable as contrary to public policy.
The CIOT also recommends that the government consider an early high-level consultation on the implications of remote working abroad, covering:
complexities of managing employees in another jurisdiction including, from a tax perspective, possible social security and withholding/reporting obligations in the remote jurisdiction; and
additional reporting obligations for companies having a corporate tax liability on the chargeable profits made by the permanent establishment for employees working in that country.
The CIOT also repeats a request made last month (see Tax Journal, 24 September) for the government to review the taxation of employee ownership trusts (EOTs) to encourage take-up and discourage their abuse.
Pete Miller, chair of the CIOT’s Owner Managed Business Committee, said that there was clear support for the EOT tax regime but ‘removing unnecessary costs from the process of transferring a company into employee ownership should be a priority’.
‘We are also concerned that some advisers seem to be recommending EOTs as a tax planning measure without any real commitment to employee engagement, he said.
‘In particular, we have heard of advisors recommending EOTs simply as an interim tax-saving step where the intention is, in the relatively short term afterwards, to sell off or float the company. This suggests a lack of genuine commitment to employee engagement,’ Miller said. ‘We think it is worth exploring ways to guard against this outcome and the consequent loss of tax revenue. One option would be to require EOTs to be resident in the UK as a condition of accessing the favourable tax treatment.’
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