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Consultation begins on benefits in kind simplification

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Following the announcement (at Budget 2014) that a number of measures would be introduced to simplify the administration of benefits in kind, the government has now launched four consultations, which close on 9 September, on:

  • the abolition of the threshold for the taxation of benefits in kind for employees who earn less than £8,500 a year. The consultation focuses on the level of protection (if any) which should be afforded to groups of employees adversely affected by the abolition;
  • the introduction of a statutory exemption for ‘trivial’ benefits. The statutory exemption will be available at each employment, so that employees with more than one employment will benefit from more than one exemption. The consultation focuses on the level of a monetary limit in the definition of ‘trivial’ and on whether the statutory exemption should be based on the annual cost or number of trivial benefits in kind provided in a tax year;
  • the replacement of the dispensations regime with an exemption for expenses paid or reimbursed by employers. The exemption will apply to all expenses qualifying for tax relief, and to all employers, without any option to opt in or out. The government intends to set out new models for acceptable record keeping in guidance, rather than in legislation; and
  • the detail of a voluntary system for employers to account for tax on employee benefits in kind and expenses in real time through the payroll, which could also include class 1A NIC. Three priority areas for consultation are; private use contributions for company cars and fuel, private medical/gym membership fees, and one-off large benefits through transfers of assets.