Powers to make temporary modifications to employment taxation

According to HM Treasury, COVID-19 has highlighted the limited scope to make changes to the current benefits in kind and expenses tax system to respond quickly to the pandemic. The government has had to introduce primary and secondary legislation with temporary effect to respond to the pandemic, to exempt a number of benefits in kind, change the qualifying conditions of certain benefits and provide relief for specified expenses and reimbursements.

During any future disaster or emergency, the government believe it may be necessary to make similar changes on a temporary basis. The current legislation only allows changes to be made through secondary legislation in limited circumstances.

In order to respond effectively to disasters or emergencies of national significance like COVID-19, the government are introducing regulation making powers that will allow HM Treasury to respond quickly to various emergency situations, including but not limited to pandemics, if deemed necessary.

The new measures

These new measures allow HM Treasury, under ministerial direction, to make regulations to make temporary modifications to Parts 3, 4 and 5 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA) for a period of up to 2 tax years in the event of a disaster or emergency of national significance as determined by HM Treasury. It is claimed that this will enable the government to support taxpayers, for example by:

  • Exempting benefits in kind of a specified description from income tax where appropriate
  • Changing the qualifying conditions for exemptions on benefits in kind
  • Exempting specified reimbursements from the charge to income tax
  • Providing relief for specified expenses

For the full proposals see:

PAYadvice.UK 28/10/2021

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