Still time for fleets to have say in expenses consultation
The Treasury has extended the deadline on an important consultation that could lead to major changes on travel expenses, including fuel.
Previously open until 12 June 2017, the call for evidence on taxation of employee expenses is now open to comments until 11:45pm on 10 July due to the announcement of the general election – with fleets being urged to have their say.
The consultation is partly designed to help HM Treasury understand why tax relief claims rose by 25% to £800m per year between 2010 and 2015, and according to Alphabet, could see a proposal to abolish tax allowances on travel and subsistence expenses revived after first being mooted by the Office of Tax Simplification (OTS) in 2014 (see OTS report here).
Clive Buhagiar, head of pricing and planning, commented: “From HMRC’s perspective, this would eliminate a huge number of claims for tax relief on expense costs that either weren’t reimbursed by employers or which were reimbursed at less than the relevant AFR or AMAP rate.
“Changes resulting from the consultation could have major impacts on fleet, travel and subsistence policies, especially if the OTS’s recommendation is taken up,” he added.
If implemented, the move could see all drivers want to be reimbursed for fuel and mileage at the full-scale rates since they could no longer claim tax relief if paid less. Fleets would also face more administration because employees would take care to put every scrap of travel costs through the expenses process, knowing that they would not be able to claim tax relief on non-reimbursed costs at the end of the tax year.
Last month also saw business travel data specialist TMC urge companies to respond to the document, saying that, provided flat-rate expense allowances are set at a realistic level, they can be beneficial for fleets, including through less paperwork for the driver, the employer and for HMRC as well, since realistic flat rates result in fewer claims for tax relief at year-end.
Further recommendations by the OTS include lifting the requirement for employers to retain receipts for scale charge expense claims, and that tax reliefs for travel and subsistence should be reviewed formally every 10 years to make sure the system keeps up with changing work patterns.
To access the consultation, click here.