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Benefits in kind reforms: The £8,500 threshold stays

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23rd Apr 2008
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The £8,500 threshold which ensures that 'lower paid' workers are not taxed on certain benefits in kind (BIKs) will remain unchanged despite radical reforms to the administration of BIKs.

HMRC had originally put forward the idea of removing the threshold as part of its latest consultation exercise which will see employers having to put BIKs and expense payments through the payroll.

Lower paid workers are something of a political 'hot potato' at the moment; a year after the relevant budget announcement, it has finally dawned on MPs that the removal of the 10% tax band for earned income purposes will hit this group of workers hardest.

The payroll and benefits consultation ended on 17 March and HMRC says that the responses to the consultation indicate that the removal of the £8,500 threshold, would have an adverse impact on low paid employees and possibly the voluntary sector. The Government has therefore confirmed that it will retain the £8,500 threshold.

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By abelljms
02nd May 2008 12:03

it's nonsense
BIK s should Either be taxable or not.

think it through intellectually.....

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By User deleted
30th Apr 2008 21:51

Indexation
So, probably worth about £2.5 million in today's money then!

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By User deleted
28th Apr 2008 20:44

The only threshold that never changes!
http://www.publications.parliament.uk/pa/cm198889/cmhansrd/1989-04-20/Writtens-1.html

Written Answers to Questions Thursday 20 April 1989

Mr. Bright : To ask the Chancellor of the Exchequer when the limit for the P11D form was raised to £8,500 ; and what would be the equivalent figure in current monetary terms.

Mr. Norman Lamont : Employees whose earnings, including the value of benefits, are at a rate of £8,500 or more per year are liable to tax on benefits in kind. All directors are liable regardless of the level of earnings. The earnings threshold--also known as the P11D limit--was set at £8,500 in 1979-80 and, if it had been indexed in line with inflation according to the statutory formula for increasing personal allowances and thresholds, the threshold in 1989-90 would be £18,100.

Mr. Bright : To ask the Chancellor of the Exchequer what is his policy towards indexing the limit for the P11D form in line with inflation.

Mr. Norman Lamont : The Government have at no time sought to increase the threshold at which employees pay tax on benefits in kind, since in principle all employees should pay income tax on the whole of their earnings whether received in cash or in kind.

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