Taxation of Employee Expenses - Call for Evidence Survey

In a previous review, the Office of Tax Simplification highlighted a need for a general review of the rules and administration relating to employee expenses with a view to the re-establishment of general principles and alignment with current employment practices.

Whereas HM Treasury (HMT) says that there are no plans to remove the tax relief on employee expenses they wish to understand better how the rules are working in practice and say that employer views provided as part of the Call for Evidence process will be factored into developments in tax policy.

HMT says there are three drivers motivating the Call for Evidence:

1. Can the current rules and administration be clearer and simpler? It is important that employees and employers are both clear on what tax reliefs employees are entitled to claim, and that making these claims is as simple and straightforward as possible.

2. Are the tax rules for expenses fit for purpose in the modern workplace? The main principles behind the current rules for expenses were introduced in the mid-nineteenth century. There have been major changes in recent years with regard to where and how people work - the tax rules need to keep pace.

3. Why has the cost to the exchequer of tax relief for expenses which are not reimbursed increased? Cost is now around £800 million per year, and there has been a 25% increase in claims between 2009-10 and 2014-15. The reasons behind the rising cost may well be appropriate but it is not clear what is driving this increase.

The Call for Evidence document can be accessed here: https://www.gov.uk/government/consultations/taxation-of-employee-expenses-call-for-evidence

We have put together a short survey in order to inform BUFDG's response to the Call for Evidence although we imagine that some members will also make their own responses. We should be grateful if members would take the trouble to answer the survey questions as fully as possible and be assured that all responses will be treated anonymously in our dealings with HMT as part of this exercise.

Taxation of Employee Expenses - Call for Evidence

Background

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* 1. Your name (in case we have any queries to follow up with you):

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* 2. Name of your university/institution (this will NOT be included in the response to HMT):

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* 3. Do you have more than one expenses policy, for example according to department or role?

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* 4. How often do you review the content of your expenses policy and are such reviews prompted by tax rule changes or some other reason?

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* 5. Other than tax rules are there any other factors you consider when you formalise or revise your expenses policies? Please provide details

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* 6. In what ways do employees influence or input into the content of your expenses policies?

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* 7. What evidence are employees expected to provide to substantiate expenses claims?

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* 8. Are you able to provide examples of circumstances where you pay expenses via round sums, flat rates or other allowances?

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* 9. In what ways have the type, volume and amounts of expenses claimed by employees changed in recent years and have the tax rules and guidance kept pace with these changes?

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* 10. Are employees aware of how to claim tax relief from HMRC for expenses not reimbursed under the terms of your expenses policy?

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* 11. Do you provide information or assistance to employees to facilitate the making of claims for expenses tax relief from HMRC?

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* 12. If you are aware of your employees using agents to assist in making claims for tax relief to HMRC do you have any idea why they are engaging such help rather than making claims personally?

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* 13. Do you think that the tax rules regarding the types of expenses that can be claimed are sufficiently clear? Do you have any specific examples of lack of clarity?

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* 14. Do you have any suggestions for improvements either in terms of the guidance available or HMRC administration in terms of making claims?

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* 15. In what ways do you think that the rules and guidance could be updated to reflect modern working practices eg home working, more than one place of work etc?

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* 16. Are you able to provide examples where you envisage potential changes to the range, volume and/or amounts that employees may seek to claim/HE employers may need to reimburse in the future?

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* 17. What specific areas of employee expenses do you think that HMRC should consult upon in the future regarding making changes and/or simplification?