Small employers and limited company contractors are being warned this week that the government has shelved its plans to exempt them from reporting benefits in kind (BIK), according to Contractor UK.
Despite saying that there would be an exemption put in place for more trivial benefit payments, this initiative has now been put on hold for the time being – meaning that anything from a bunch of flowers to a bottle of wine will need to be reported.
Failure to report any BIK under £50 will mean that even the most well-intended of gestures could result in an unpleasant tax bill. In addition to this, the decision means that those employers who changed their benefits process in accordance with the announcement of the under £50 exemption on April 6th will need to go back to their old ways for now.
But for others, the article notes, things will remain largely the same, as not every business was ready for the proposed changes – so operations will continue ‘as usual’.
Tax experts have so far commended the decision not to go ahead with the exemption. Commenting on the news, the Association of Taxation Technicians stated: “We felt that HMRC’s understandable zeal to eliminate scope for potential abuse of the proposed exemption had undermined its very purpose; namely the removal of the administrative burden of reporting tax and NIC on low value benefits.
“We are therefore pleased to see that the measure has been dropped from the pre-election Finance Bill. We hope that the Revenue will use the time afforded by the postponement to reconsider the finer details of some aspects of the policy”.