The four areas under consideration are:
The abolition of the £8,500 benefit in kind threshold.
If an employee earns less than £8,500 (including taxable benefits) then they have to complete a P9D form in place of the P11D. HMRC reports in 2011/2, it only received 15,000 P9D forms.
Statutory exemption for trivial benefits in kind.
In 2011/12, HMRC reports more than 500,000 P11Ds were completed providing BiKs of £100 or less. The consultation states each P11D costs an estimated £6.50 to process. Views are invited on the definition of a ‘trivial’ BiK and how this exemption should be structured.
Exemption for expenses paid or reimbursed by employers.
This involves the removing of the current system of dispensations for reporting non-taxable expenses.
Voluntary payrolling for benefits in kind.
The Government is investigating voluntary payrolling of benefits in kind instead of P11D form submission in real time.
Payrolling arrangements would aim to include the value of the BiKs and expenses provided in taxable pay as if they were cash payments and to deduct the tax due in each pay period, at the same time as the tax and Class 1 NICs due on cash earnings. The result is that the tax due on BiKs and expenses is deducted and accounted for in the year of provision rather than through estimates in the coding with an end of year reconciliation.
The consultation runs until September 9, and further information can be found on www.gov.uk.