The broad issue of employee expenses has been on the Government’s radar for some time. A call for evidence document was issued in May 2017, which requested comments on the simplification and modernisation of the current system. KPMG provided a detailed response.
The Government has now announced its plans to make several changes to the taxation of employee expenses. However, it has been noted that there was little evidence to support fundamental reform to the tax relief for employee expenses, and consequently the Government has no further plans to do so. Instead, however, the following areas will see changes in the not too distant future:
- Self-funded training – The Government will consult in 2018 on extending the scope of the tax relief currently available to employees and the self-employed for work-related training costs, to support lifelong learning and retraining.
- Subsistence – benchmark scale rates – To reduce the burden on business, from April 2019 employers will no longer be required by HMRC to check receipts when reimbursing employees for subsistence using benchmark scale rates. Employers will only be asked to ensure that employees are undertaking qualifying travel. Note, however, that this welcome simplification does not apply to actual amounts reimbursed, or reimbursements made under agreed bespoke scale rates and industry-wide rates.
- Subsistence – overseas scale rates – From April 2019 the existing concessionary accommodation and subsistence overseas scale rates will be placed on a statutory basis, to provide greater certainty for businesses. Employers will only be asked to ensure that employees are undertaking qualifying travel.
- Guidance and claims process for employee expenses – HMRC will 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. This programme of work will also take action to improve awareness of the process and the rules.
We understand that travel and subsistence expenses featured heavily in respondents’ contributions to the call for evidence. The Government has now concluded that responses to this year’s call for evidence provided no new evidence or reason for change. However, they remain open to further discussions about travel and subsistence issues.
The full response to the call for evidence is expected to be published on the GOV.UK website on 1 December.
Contact: Colin Ben-Nathan, Mike Lavan