HMRC have announced a package of measures intended to simplify and modernise the tax system. These include mandating the payrolling of Benefits In Kind, from April 2026, and allowing parents who do not claim Child Benefit to obtain a National Insurance credit.
Mandatory payrolling of Benefits In Kind (BIKs)
Payrolling BIKs, to report and pay Income Tax and Class 1A National Insurance Contributions (NICs), will be mandatory from April 2026.
- Most BIKs can currently be Payrolled by choice, with the exception of Beneficial loans and Employer-provided accommodation.
- Where BIKs are payrolled, this removes the need to submit form P11D. However, Class 1A NICs still require reporting on form P11D(b).
- From April 2026, all BIKs will need to be payrolled. The facility to report Class 1A NICs via payroll software will be introduced, removing the current P11D(b) requirement for payrolled benefits.
Draft legislation will be published later this year.
Amending National Insurance credits for parents
Legislation will be introduced to create a method for parents and carers to apply for National Insurance (NI) credits for tax years where they did not claim Child Benefit.
- This is to ensure State Pension entitlement is preserved, by adding qualifying years of NI.
- Eligibility for the credit will be closely based on Child Benefit eligibility criteria.
- Transitional arrangements will ensure those affected since 2013 are still able to claim.
- Applications will be available for 6 years following the relevant tax year and claims will be possible from April 2026.
Secondary legislation will be introduced as soon as possible.
See High-Income Child Benefit Tax Charge
Tax simplification for alternative finance arrangements
A consultation has been published proposing changes to the Capital Gains Tax (CGT) rules that apply to alternative finance arrangements.
- Amendments are proposed to the existing rules so that, where property is used as collateral for the purposes of raising finance, the CGT outcome is the same whether alternative finance or conventional finance is used.
- The capital allowance implications of refinancing via alternative finance arrangements are also explored.
The consultation closes on 9 April 2024.
See Simplifying alternative refinancing arrangements for tax
Employees' tax relief for non-reimbursed expenses
A new online service for employees to claim tax relief on all of their expenses in one place is being developed.
- This is intended to simplify the claim process for many employees and allow HMRC to automatically process claims.
- Currently, claims are submitted through existing online services, or via digital or paper forms. This results in some claims being manually processed.
Further details will be provided later this year.
See Annual expenses for employees: How to claim
Reforming UK law for transfer pricing, permanent establishments and Diverted Profits Tax
A summary of responses has been published to the 2023 consultation which proposed reforms to transfer pricing, permanent establishment and Diverted Profits Tax legislation.
- The aim is to develop simpler, shorter legislation that is easier to understand and administer and provides greater certainty for both HMRC and taxpayers.
- There will be continued engagement with stakeholders on the proposed approach set out in the summary of responses.
Draft legislation is expected to be published for consultation later in 2024.
Useful guides on this topic
Payrolling of benefits
The value of certain taxable Benefits In Kind can be included in taxable pay when calculating the PAYE deducted from payments of wages and salaries to employees.
High-Income Child Benefit Tax Charge
What is the High-Income Child Benefit Charge? Who pays it? Can you appeal against an assessment? Are there any useful cases from the tax tribunals?
Annual expenses for employees: How to claim
A guide to explains the different ways employees can claim tax relief for the employment expenses they incur as part of their jobs.
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