Tag Archives: Budget

Finance Act 2015 – new tax reliefs

OTS stand

Now that the 2015 Finance Act has been passed, we’ve updated our master list of tax reliefs. One relief has been abolished – the £8,500 benefits threshold. But seventeen new reliefs have been added, bringing the grand total to 1,156.

OTS list of tax reliefs updated to March 2015

 

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Autumn Statement 2014 and the OTS

Autumn Statement

It was gratifying to hear the Chancellor give credit to Michael Jack and John Whiting of the OTS in his Autumn Statement speech today.

More importantly, he said the Government accepted “almost all” of the recommendations in our October report on improving the Competitiveness of UK tax administration. After the speech, we received a letter from the Financial Secretary, David Gauke MP, setting out the Government’s detailed response to this and other recent OTS reviews. We will put the letter on our website shortly.

Of course, many of the ideas in that review would be major undertakings with wide ranging impacts on businesses, and should rightly be considered fully in the next Parliament. Examples are closer alignment of accounting profit with taxable profit, and removing the distinction between trading and investment income. In the shorter term, HMRC has accepted our proposals to conduct a post implementation review of RTI (Real Time Information) and to improve assistance to businesses with greater use of email and better telephone services with appropriately trained staff along with many other administrative changes.

It is good to see such a positive reaction to our review of employee benefits in kind and expenses with four major reforms announced:
– abolishing the £8,500 taxable benefits threshold
– introducing a statutory exemption for benefits under £50
– a system of voluntary payrolling of benefits
– replacing the expenses dispensation regime with an exemption for paid and reimbursed expenses.
We expect to see these featured in the 2015 Finance Bill. The Treasury will also soon launch a major review of tax rules for travel and subsistence expenses.

On the downside, the government has decided not to take forward two radical ideas from our review of employee share schemes – the proposals for a “marketable security” and a new employee shareholding vehicle. There simply wasn’t enough interest in the recent HMRC consultation on these ideas, which disappointed us. But overall there has been a good programme of reforms in the share schemes area, so we mustn’t gripe too much.

We are busy carrying out our review of the tax rules for employment status and expect to publish that report in February. We are also putting the finishing touches to a sweeping up report on taxation of business partnerships. And of course, we look forward to seeing the draft Finance Bill when it comes out shortly. One small job will be to update our tally of tax reliefs – currently at 1140, but we noticed a few new ones announced today…

Jeremy Sherwood
Head of OTS

Unapproved employee share schemes

BlackberriesThis month sees the culmination of our two major reviews of unapproved employee share schemes, published today, and pensioner taxation, published next week.

Our final report on unapproved employee share schemes comes hot on the heels of the Government’s response to our review of tax advantaged employee share schemes in December. The Chancellor accepted the majority of our recommendations from that report and we sincerely hope our report on unapproved employee share schemes will be met in the same way.

As our Chairman Michael Jack notes, this area of the tax system is a “bramble patch” of complexity. Continuing this metaphor he hopes that the package of recommendations in our report will “enable users to access the blackberries more easily and with fewer prickles” from the “thorns of complexity”.

So what does the report say? Well, we have made six main recommendations, with three smaller, but still significant recommendations. These include recommendations on the general taxation of unapproved share schemes, international aspects, administration (including Pay as You Earn, Form 42 and valuation) and a proposal for a new vehicle for holding employee shares. Full details of our recommendations can be found in the report at the link below:

http://www.hm-treasury.gov.uk/d/ots_unapproved_employee_share_schemes_final.pdf