James Murray, the Exchequer Secretary to the Treasury, made a Written Ministerial Statement last week that included a number of tax simplification, administration and reform measures.
Many are intended to reduce burdens on employers and small businesses, whereas others are designed to modernise H M Revenue & Customs (HMRC) systems and processes.
Here are five highlights
1. Delay to payrolling benefits
Mandatory payrolling of benefits in kind is delayed to April 2027 to give employers more time to prepare.
In addition, HMRC intend to make sure that the new requirements are easy for employers to implement.
Payrolling benefits is a way to report and tax employee benefits through payroll rather than submitting forms P11D at the end of the tax year. Currently, employers can voluntarily choose to payroll benefits, however the government intends for this to become mandatory from April 2027.
2. Simplification to Capital Goods Scheme
The VAT Capital Goods Scheme (CGS) makes you adjust how much VAT you can reclaim on expensive items like buildings or equipment if how you use them changes over time – especially if you move between taxable and exempt activities.
New legislation will be put forward to remove computers from the assets covered by the scheme.
The capital expenditure value of land, buildings and civil engineering work at which CGS begins to apply will be increased to £600,000 (excl. VAT) from its current level of £250,000 (excl. VAT).
This will be a welcome simplification for affected businesses.
3. Updates to Check Employment Status for Tax (CEST) Digital Tool
HMRC is making this tool easier to use to help you determine if a worker is self-employed or employed.
If you would like a second opinion about the results of a CEST check you have carried out, please contact us on 01223 810100 and we would be happy to help you.
4. VAT Treatment of Business Donations of Goods to Charity
The government is to begin a consultation on the VAT treatment of business donations of goods to charity. The consultation will look at what types of goods are donated, how they are distributed, and if there is scope to make adjustments that will balance preventing tax evasion with avoiding burdensome administration requirements.
5. Less paper in the post
HMRC is aiming to reduce the amount of paper correspondence and will use digital formats instead. Therefore, we should begin to see fewer letters from HMRC arriving in the post as they make use of online methods.
Certain critical correspondence will continue to be sent by paper, and promises have been made not to abandon those who are unable to access correspondence by digital means.
