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HMRC implements some of the “quick wins” highlighted in the recent OTS report
21 October 13 | By: Jas Jhooty
In August 2013 the Office of Tax Simplification (OTS) published their interim report as part of its review of employee benefits and expenses. As part of this report 43 “quick wins” were identified that could easily be implemented.
Last week the OTS published a progress report detailing which of their recommendations have already been implemented, and which will shortly be carried out.
“Quick wins” already implemented
- Provision for the reimbursement of car fuel where the employee contributes by 6 July. This is already permitted, and is confirmed in HMRC guidance manuals
- Providing new employers with a link to the relevant sections of the HMRC website when they first register, in order to raise awareness of the employee benefits and expenses issues that may be relevant to their business. HMRC has confirmed that new employers are sent a CD Rom which provides a link to the HMRC website.
- Allowing voluntary use of form P46 when a car is replaced. HMRC has confirmed that it is already possible to submit this form online when a car is replaced.
“Quick wins” which will be implemented in the short term
- Voluntary payrolling of benefits in place of reporting benefits on forms P11D. HMRC has confirmed that it is already looking at this area, and as part of their review of HMRC administration the OTS will be working closely with HMRC to explore what gradual changes can be phased in, alongside any legislative changes that may be necessary, in order to achieve this.
- HMRC to publish a list of benefits which they consider to be trivial, presumably with limits on the amounts.
- HMRC to better publicise the guidance that it has available in relation to employee benefits and expenses, and improve the access and automatic links to relevant information, in order to improve awareness and understanding for both employers and employees. This is an issue that is relevant to several of the “quick wins” that were identified, specifically:
- improving website guidance and cross-referencing generally, and keeping the “What’s New” pages up to date;
- improved general guidance on dispensations and PSAs, including the availability of PSAs for overseas employees and non-domiciles ;
- raising awareness that there is a list of standard items and conditions that will always qualify for dispensations ,and also raising awareness and availability of the online process for applying for dispensations;
- improving guidance regarding the operation of the OT tax code in relation to termination payments, and the timing for issuing a P45; and
- raising awareness that it is possible to voluntarily use form P46 when a car is replaced and complete this online
- HMRC to review the published list of employments where it is “customary” to get accommodation
Longer term adoption of the OTS recommendationsNew guidance on Travel & Subsistence including: –
- What qualifies for subsistence
- Updated Booklet 490
- New guidance on temporary workplaces
Review of HMRC Administration
- Redesign & simplification of P11D form
- Tick box on P11D to indicate that a benefit is being provided for one year only
- Including details of continuing benefits after termination
- Employers being allowed to sort out their employee’s tax issues if permission given by the employee
- More items allowed to be included in PAYE Settlement Agreements
- Dispensations can be applied for up to 6th July following the year they are to apply for
- HMRC to accept in-year notifications of benefit changes
- Review of the taxation of termination payments
- Revisions to car fuel benefit
- Reducing length of time to qualify for a Long Service Award to 5 years
- Reinstatement of the “friends & family” subsistence scale rate
We commend the speed at which the OTS report recommendations are being implemented. It is encouraging to see that the Treasury is backing OTS’ approach by taking their report seriously.
Most employers will welcome the recommendations that are being implemented as they will serve to reduce their workload by providing clarity to many of the grey areas in employment tax legislation.