The Office of Tax Simplification's has published an interim report as part of its review of employee benefits and expenses. Here is its list of 43 possible "quick wins" to reform the system.
These include streamlining the cycle to work scheme; aligning tax and NIC treatment of mileage rates over 45p; changes to the HMRC forms and publishing a list of items that automatically qualify for a ‘dispensation', meaning no benefit will arise for employees.
The full interim report can be viewed at: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/227088/ots_employee_benefits_interim_report.pdf
The list of the 43 quick wins is as follows:
1. HMRC to encourage voluntary payrolling of benefits, in place of reporting benefits on forms P11D.
2. HMRC to review published list of employments where it is "customary" to get accommodation.
3. HMRC to allow home broadband costs to be subject to PAYE Settlement Agreements (PSAs).
4. Allow car fleet operators to buy multi-year road fund licences.
5. Exempt electricity for electric cars from the benefit rules.
6. Car fuel benefit should be based on what you put in your tank, not how you pay.
7. Allow reimbursement of car fuel where employee contributes.
8. Carry out a proper evaluation of the cycle schemes success and look for ways of streamlining its administration.
9. Bring the minimum length of service for long service awards down to five years.
10 Allow the long service award exemption to apply if there has been a previous
award unless that was within five
11 HMRC should publish a list of benefits they consider to be trivial, presumably with limits on the amounts. (paragraph
12 Align tax and NICs treatment of mileage rates over 45p.
13. HMRC should not require retention of fuel VAT receipts for expense claims where only a mileage rate has been claimed.
14. HMRC should give better guidance on what qualifies for subsistence expenses.
15. HMRC should reinstate the practice of having a ‘friends and family' scale rate for subsistence expenses.
16. HMRC should commit to revising and updating the booklet 490 on employee travel to fit better with modern working patterns.
17. HMRC to publish travel and expenses guidance on temporary workplace rules for projects carried out in phases.
18. HMRC should stop treating London as one workplace regardless of travel time.
19. Why do removal expenses need to be entered in three different places on the form P11D?
20. Remove the 5 April requirement in s274 of the Income Tax (Earnings and Pensions) Act 2003 and change it to "within X months of commencing new duties".
21. HMRC to review its policy on "auto PILONS".
22. Simplify rules regarding termination payments for overseas employees.
23. Improve HMRC guidance regarding the operation of the OT tax code in relation to termination payments, and the timing for issuing the P45.
24. Allow a single return of continuing benefits given on termination where these are provided for a set period of up to two years.
25. Employers should be able to sort out straightforward employee tax issues with HMRC if the employee gives consent.
26. Introduce a process where tax codes with fixed expense allowances are reviewed when employments change.
27. Improve communication between HMRC officers dealing with employer and employee.
28. Improve guidance and design of Form P11D, for example state that you need a different form if the employee earns less than £8,500.
29. Introduce facility to re-submit forms P11D and P11D(b) online.
30. Add a box to the P11D to tick if the benefit is just for one year.
31. Allow voluntary notification of in-year changes to benefits.
32. HMRC to improve guidance on allowable expenses.
33. HMRC to allow all types of expenses claims to be made on one form, or online.
34. Improve web-site guidance and cross referencing, for example keep the What's New pages up to date.
35. HMRC should publish a list of standard items and conditions that will always qualify for dispensations.
36. Allow dispensations to be made for a tax year by 6 July of the following year (the P11D deadline).
37. HMRC should make it clear that they allow PSAs to be made for overseas employees and non-doms. (paragraph 5.35)
38. The online dispensation process should be publicised and made available to all employers.
39. Allow adjustments in relation to AMAP reimbursements to be submitted online.
40. HMRC to improve guidance and awareness of dispensations and PSAs.
41. HMRC to improve layout and design of Form P87 for claiming expenses.
42. HMRC should reintroduce voluntary use of form P46 (car) when a car is replaced.
43. Provide a link to HMRC's website guidance for new employers when they first register.