The Chartered Institute of Taxation has welcomed moves to simplify the taxation of employee business expenses. The CIOT argues that the system for exempting from tax employees’ employment expenses and certain employer-provided ‘benefits’ needs to be simplified if it is to keep pace with changes in the labour market and the move away from ‘traditional’ employment.
Commenting on government plans to consult on extending the scope of tax relief currently available to employees and the self-employed for work-related training costs, Colin Ben-Nathan, Chair of the CIOT Employment Taxes Sub-Committee, said:
“We welcome the government’s announcement to consult in this area.
“Currently, the work-related training rules provide tax relief only where the employee is reimbursed or the employer contracts directly for the training, but not where the employee incurs an expense that is not reimbursed.
“This does not seem fair when employees are increasingly encouraged by their employer to retrain, develop new skills, dual-qualify, etc at the employee’s own expense.”
Subsistence benchmark scale rates
To reduce the burden on employers, from April 2019 they will no longer be required to check receipts when reimbursing employees for subsistence using benchmark scale rates. Colin Ben-Nathan commented:
“Employer reimbursements at flat-rates and benchmark scale-rates are intended as an administrative easement but the existing requirement that employees provide receipts for often very small amounts, e.g. meals whilst working away from the normal workplace, adds unnecessary bureaucracy to a system aimed at simplifying the reimbursement of expenses incurred.
“The removal of the requirement to check receipts will undoubtedly reduce costs for employers and we welcome this move.”
Guidance and claims process for employee expenses
Commenting on HMRC plans to work with external stakeholders to improve the guidance on employee expenses, particularly on travel and subsistence and the process for claiming tax relief on non-reimbursed employment expenses, Colin Ben-Nathan said:
“A simpler process for employees to claim tax relief for their expenses is something which we recommended when contributing to the Government’s call for evidence. Employees need easier access to guidance around what employment expenses they can claim tax relief on, and how.
“Better information is also needed for employees, and employers, around record-keeping requirements, and ‘proof of entitlement’, so that it is easier for employees to claim a tax deduction for eligible expenses and for employers on what amounts can be reimbursed tax-free.”
Benefits in kind: electric vehicles
Commenting on the news that, from April 2018, there will be no benefit-in-kind charge on electricity that employers provide to charge employees’ electric vehicles, Colin Ben-Nathan said:
“If an employer provides electricity to an employee to charge their own car, a benefit in kind arises based on the cost of the electricity used for private mileage, but there is no clear guidance on how to calculate the cost of electricity and it is therefore necessary to estimate the cost.
“Exempting the provision of workplace electricity will remove a significant administrative burden in calculating what is often a relatively small sum.
Notes for editors
1. In the CIOT’s response to the government’s call for evidence on the taxation of employee expenses, we recommended:
“Greater alignment of the rules under which employment expenses an employer pays or reimburses tax-free with the rules on which non-reimbursed employment expenses an employee can obtain tax relief on.
“A review of what flat-rate tax-free allowances and benchmark scale rate payments are presently available to ensure that the expense remains relevant, and the amount reflective of current costs.
“[Improved] information, guidance and processes … so that employees can better understand and obtain the tax relief to which they are entitled on employment expenses, without having to resort to specialist advice.
2. The Chartered Institute of Taxation (CIOT)
The CIOT is the leading professional body in the United Kingdom concerned solely with taxation. The CIOT is an educational charity, promoting education and study of the administration and practice of taxation. One of our key aims is to work for a better, more efficient, tax system for all affected by it – taxpayers, their advisers and the authorities. The CIOT’s work covers all aspects of taxation, including direct and indirect taxes and duties. Through our Low Incomes Tax Reform Group (LITRG), the CIOT has a particular focus on improving the tax system, including tax credits and benefits, for the unrepresented taxpayer.
The CIOT draws on our members’ experience in private practice, commerce and industry, government and academia to improve tax administration and propose and explain how tax policy objectives can most effectively be achieved. We also link to, and draw on, similar leading professional tax bodies in other countries. The CIOT’s comments and recommendations on tax issues are made in line with our charitable objectives: we are politically neutral in our work.
The CIOT’s 18,000 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’, to represent the leading tax qualification.
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