Treatment of employee benefits is changing
Most commercial business owners will agree that the completion of Form P11D is a bit of a hassle sometimes. Form P11D is the current method of reporting where employees and directors have been provided with some type of “benefit”, with a financial value, instead of receiving income.
It is understandable that reporting is necessary for benefits like company cars and items of significant financial value. However, it can be tiresome with smaller “niceties” like flowers and chocolates, which pose an administrative burden especially when taking into account to the financial values in question.
Trivial benefits could be made exempt from reporting
First of all, HMRC are in discussions about abolishing the current £8,500 limit and instead making these trivial benefits to employees exempt from the “tax benefit” system completely and therefore not required for reporting purposes.
A payroll style system
Additionally, to further ease the administration, up for discussion is a payroll style tax reporting system for employee benefits, to replace Form P11D. This means reporting and payment would happen in “real time”, as the benefit is given, and not via self-assessment. For the trivial benefits this could work very well.
Further news due soon
How much the financial value of a trivial benefit could be is one of the unanswered questions. Also, whether the annual exemption will relate to the annual spend per company or the number of “items of benefit” in each tax year.
Further news is due later this month as part of the HMRC Tax Simplification Programme.
Figurit keep our clients up to date with the latest news from the financial and tax world. You can keep an eye yourself too by regulalry visiting our blog.
