We are a temporary staff agency with around 200 workers who currently claim subsistence allowances under a salary sacrifice arrangement, this is subsistence paid for by the worker in the course of a travelling appointment (they are delivery drivers with no set route or area) and the claim is made under section 337, it is not travel to a temporary workplace under an overarching contract exploiting the 24 month rule. I assume that I am correct in thinking that the workers will still be able to claim these expenses after 6th April 2015 and they will not be prohibited by the changes (subject to consultation) relating to overarching contracts and the temporary workplace rules - which I think do not apply to s337 claims.
However, because of the forthcoming changes to expenses/dispensations, presumably our dispensation will no longer apply after 6 April 2016. We will also not able to take advantage of the new statutory expenses exemption because it does not apply to expenses paid under a salary sacrifice arrangement. So will we need to complete 200 P11Ds and 200 section 336 claims?
I would apprecate any comments.
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You will not have to do 200 P11Ds
It will have to go through payroll. You are making a salary sacrifice for a cash payment, which represents a tax deductible expense in the employee's hands, but which is not truly being reimbursed by the employer. Doesn't seem fair does it?
Salary Sacrifice
Ensure that your salary sacrifice has been implemented properly otherwise it will cause you problems if challenged by HMRC as per the Reed case a couple of years back.
Previously...
... any expense payments not covered by a dispensation had to go on a P11D, and the employee would then make a corresponding claim under s336-338.
Now expense reimbursements will just be exempt, unless made under salary sacrifice arrangements which are intended to avoid tax or national insurance (the new ss 289A-289E, inserted by FA 2015, s 11), which this sort of arrangement will be considered to be.
FA 2015, s 17 then provides authority for regulations to be made to tax expenses and benefits under PAYE.
HMRC do not like salary sacrifice arrangements, where taxable pay is swapped for the payment of a tax deductible expense, as evidenced by Reed, so you can probably guess what the regulations will end up saying. I would lay money on there being corresponding provision for NIC purposes by next April.
I do think such arrangements are abusive, so I am not sympathetic I'm afraid.
I don't think the current consultation will have any impact on the situation you describe in the OP though.
@ Stratty I think Reed ultimately lost because the workers' workplaces were considered to be permanent workplaces, such that the travel expenses concerned fell outwith any dispensation, rather than poor implementation of the salary sacrifice.
the Reed case
was abusive, as it was "sold" to the workforce as being to their advantage, in fact they got nothing and the employer pocketed the tax savings. I can see why Steve thinks that the OP's set up is abusive.
But who ...
"Salary Sacrifice andy subsistence payments"
... is andy? And why is he getting subsistence payments?
Of course ...
... it's you, hope you were travelling first class and dining in a restaurant with at least one Michelin star :o)