The government announced a review of the taxation of employee expenses at Autumn Statement 2016. A consultation was launched earlier this year examining the use of Income Tax relief for employees’ business expenses, including those that are not reimbursed by their employer.
The tax relief on expenses which employers do not reimburse and employees then claim from HMRC, costs the Exchequer £800 million per year. There has been a 25% increase in claims between 2009-10 and 2014-15. These expenses include employees using their own cars for business travel, business travel related expenses and household expenses where employees work from home.
The main objectives of the current consultation are to understand:
The consultation makes it clear that the government has no plans to remove the tax relief on employee expenses but wants to better understand the use of the relief. However, this is an interesting issue to watch and may result in changes going forward. The deadline for responses to the consultation has been extended until after the general election and is now 10 July 2017.