Proposals by HMRC to change the taxation system for employee benefits and expenses have been welcomed by the Low Incomes Tax Reform Group (LITRG).
Such changes would impact private medical insurance and group risk schemes.
The proposals, on which the consultation concluded this week, would include abolishing the £8,500 earnings threshold for benefits in kind, creating a legal definition of "trivial" benefits in kind which would not be taxed.
Simplifications to the reporting process and allowing employers to choose to collect tax on employee benefits through payroll throughout the year, not just at the end of the tax year.
The proposals originated from the Office of Tax Simplification, which has conducted a review of the current system for the government. LITRG was set up as an initiative from the Chartered Institute of Taxation.
Anthony Thomas, chairman of LITRG said, "This is a useful package of reforms designed by the Office of Tax Simplification to make life easier for employers.
He added, "Moving to one single regime for the taxation of benefits and expenses, regardless of whether an employee's earnings in a particular employment exceed the current ‘£8,500 threshold', would not only be a step towards simplification, it would also remove an element of unfairness from the current system."
Thomas also said, "Voluntary payrolling clearly presents an opportunity for simplification for employers who wish to adopt it. Nevertheless, this measure does create the potential for greater employee confusion. We recommend the introduction of a statutory requirement for employers to clearly notify employees of the benefits in kind they have received, itemising their value and indicating whether or not they have been payrolled."
David Gauke, exchequer secretary to the Treasury, said at the time the consultation was launched, "We want to make sure we get the structure and detail absolutely right and each consultation will allow us to engage with and learn from those who will be directly affected."
