OTS looks to replace clunky, out-dated, complex, burdensome and often unfair rules

19 August 2014

The review of expenses and benefits – final report also provides an update on the quick wins and on some of the more minor issues that were originally set out in Chapter 8 of the OTS interim report.

Accommodation benefit: the OTS recommends the most basic accommodation is taken out of the tax charge entirely, and that there should be a reform of the existing exemption tests with a definition based upon:

  • Whether the employee is required to live in the accommodation to enable him/ her to protect buildings, people or assets.
  • Whether the employee is regularly required to work outside normal working hours.
  • Whether he/ she is required to live in the accommodation as a result of regulatory requirements.

The OTS also recommends that all accommodation is taxed on the basis of open market rental value, subject to review every five years.

Termination payments: the OTS recommend that when considering the current and complex rules surrounding the £30,000 threshold, that the simplest way forward is for income tax relief to be only available in circumstances where the employee qualifies for a statutory redundancy payment. Under this new relief, the OTS proposes that the level of the exemption would be a multiple of the statutory redundancy payment that the relevant individual is entitled to, or alternatively, a flat amount.

The OTS blog provides a useful summary of these and many other subjects.