According to Alphabet, plans to abolish tax allowances on travel and subsistence expenses could be revived as part of the Government's current consultation into expenses tax reliefs. Part of the intended purpose of the Government's review of tax reliefs for expenses is to understand how and why tax relief claims jumped by 25% to £800 million per year between 2010 and 2015. The review is due to run until June 12th. Clive Buhagiar, head of pricing and planning at Alphabet, said: 'In 2014, the OTS (Office of Tax Simplification) recommended a formal, comprehensive study on what it called 'the possible radical idea' of travel and subsistence expenses being allowable only if reimbursed by the employer. 'From HMRC's perspective, this would eliminate a huge number of claims for tax relief on expense costs that either weren't reimbursed by employers or which were reimbursed at less than the relevant AFR or AMAP rate. 'The ongoing confusion around the implications of the Finance Bill is driving many businesses to consider offering cash alternatives to company cars, which would only further exacerbate the expenses issue highlighted by the Government,î continued Buhagiar. 'Changes resulting from the consultation could have major impacts on fleet, travel and subsistence policies, especially if the OTS's recommendation is taken up.î From the perspective of fleet managers, a potential consequence is that all drivers would seek reimbursement of fuel and mileage costs at full-scale rates, because _ even if paid less _ tax relief could no longer be claimed. The change would also bring further administration to businesses when employees, unable to claim tax relief on non-reimbursed costs, inevitably file all their travel costs through expenses processes. 'Fortunately, new technologies and working practices are already coming into play in this area. Mobility solutions, such as corporate car sharing and flexible rental offer the prospect of near-seamless alternatives to pool cars, taxis and public transport with little or no need for employees to reach into their own pockets for travel,î said Buhagiar. Alphabet is calling for fleets to have their say by responding to the consultation. Buhagiar also recommends that any fleet managers intending to make a submission should review the 2014 OTS report on employee expenses and benefits (available here). The questionnaire for the current consultation can be found on the Gov.uk website here. The Government is officially requesting opinions from anyone with an interest in employee expenses, including tax professionals and advisors as well as employers and employees who regularly utilise tax relief. Respondents are advised to provide broad evidence or answer specific questions. Quantitative data is to be considered highly valuable. The response deadline for the consultation is June 12th, 2017.
