CIOT comments on the draft regulations to exempt minor benefits (cyclists’ breakfasts and lunchtime use of works buses, sent to the Inland Revenue on 19 October 2001.
The Chartered Institute of Taxation is glad to have the opportunity to comment on these draft regulations.
Whilst welcoming any regulations which exempt benefits of a minor nature (and indeed any exemptions which encourage Travel Plans) we would like to raise the position of employers who are able to provide the breakfasts in a staff canteen. In such a case we believe any number of meals, on any particular days, could be provided without incurring an income tax charge, by virtue of section 155(5) TA 1988:
“Section 154 does not apply to a benefit consisting in the provision by the employee’s employer of meals in any canteen in which meals are provided for the staff generally”
and we should be glad of your comments.
We are also worried about the practicality of this piece of legislation. How is the employer going to know that an employee has cycled to work that day? How are the Revenue going to know that the employer has complied with the detailed rules? What record keeping will be necessary to ensure that an employee is exempt only on his/her first six tax-free breakfasts in any tax year? Won’t a lower paid employee (a part-timer?) be entitled to any number of free breakfasts? Aren’t shift workers already getting tax-free breakfasts in staff canteens?
In short, while understanding the good intentions behind this legislation, and recognising that the legislation is drafted to deal with ‘minor’ benefits, this is so minor (and probably already adequately covered by the canteen concession) that we question whether it is an appropriate subject for legislation.
We currently have some other specific reservations about the practical interpretation of the “staff canteen” and the application of Extra Statutory Concessions A2 and A74 but we will submit these separately as part of one of our papers on “Quick Wins for Tax Simplification”.
We welcome the exemption for the non-commuter use of the works bus. This is a thoroughly practical and sensible use of the legislation and will be of great use.
We note that the regulations do not specifically restrict the exemption to lunchtimes and would just seek confirmation as to whether the distance of 10 miles refers to the total round journey or the distance of the shops or amenities from the workplace. If the former we suggest that the mileage should be increased (to say 20).
We should also like confirmation that there will be no NIC charge on either of these benefits.
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