“Overcomplicated Tax Rules” says OTS

The Office of Tax Simplification has said that the rules surrounding employee expenses are a complex “minefield,” and said that they need to be updated. The rules in question have remained unchanged since the 1990s.

For example, the OTS has highlighted the example of a restaurant bill. They have suggested it should simply be an additional piece of information to be provided with an end of year tax return. Under the current system, time must also be spent deciding whether to classify it as “subsistence,” staff entertaining,” or “business entertaining.” None of these categories are treated differently for tax purposes.

The OTS has also highlighted the P11D form. This form must be provided to HMRC by employers, detailing all expenses through the year. The cost to employers of completing and returning this form last year was £160 million.

The OTS feels Real Time Information (RTI) could be useful in streamlining the expenses process.