Travel and subsistence framework discussion paper

26 April 2016

As announced at Budget 2016, the government will not be taking forward the proposed framework for consultation and the broad travel and subsistence rules will remain as they are.

HMRC has published Travel and subsistence - summary of responses which follows the publication of the discussion paper in September 2015 that outlined a proposed travel and subsistence framework for consideration.

Responses received made clear that, although complex in parts, the current travel and subsistence rules are generally well understood and work effectively for the majority of employees.

Recommendations in the OTS’s second report on the review of employee benefits and expenses led to the development of the proposed framework that was presented in the discussion paper. The OTS affirmed that their overall objectives for that stage of work had been:

  • to look for ways of modernising the systems and ensuring they are in tune with the employment patterns of today; we [the OTS] have also tried to think about emerging employment trends;
  • to reduce administrative burdens all round: to streamline (or preferably eliminate) procedures that can be delivered more efficiently; and
  • to increase certainty for employers in the rules and regulations that govern the Employee Benefits and Expenses system.

Specifically on T&S, the OTS acknowledged that improvements should be made without having to go through the disruption and uncertainty of discarding the current rules and starting again.

HMRC has looked to build on the OTS’s work in order to find a framework that would deliver simplification. They are pleased that responses to the discussion paper supported the principles underpinning the taxation of T&S, but it has become clear that these principles do not easily translate into the new rules that were set out in the proposed framework.

Having considered the responses very carefully, it is clear that the large majority of employers believe that the current system works well for most employees. Responses to the discussion paper highlighted the need for certainty and stability. HMRC has borne in mind the concerns that changes introduced under the proposed framework could replace one set of complexities for another and that this may create additional compliance burdens for employers. We therefore believe that the proposed framework does not provide enough simplicity to justify the upheaval for employers or the potential cost to the Exchequer.

Instead of taking forward the proposed framework for consultation, HMRC’s next steps will be to look at other areas of T&S that are worthy of review where real progress can be achieved. HMRC will continue to work to improve the rules and to look for simplifications to improve reporting requirements for T&S. By focusing on smaller, more achievable changes, they hope to deliver tangible improvements for employers.

CIPP response to the HMT Travel and Subsistence: discussion paper - December 2015