Making good benefit in kind costs becomes less consistently inconsistent in 2017/18

Making good benefit in kind costs becomes less consistently inconsistent in 2017/18

Wed 21 Dec 2016

Effective from 6 April 2017, i.e. 2017/18 onwards
The draft Finance Bill updates some time limits for making good benefits in kind (BiKs).  The result is that overall the time limits will become more consistent but the system is not yet uniform.
For a start, the change only affects benefits that are not payrolled: the draft explanatory notes make clear that the different time limits applying to payrolled benefits from those accounted for on P11Ds will remain. Payrolling of benefits other than vouchers and credit tokens, living accommodation and beneficial loans is already available to employers on a voluntary basis and will remain available for the time being but the Government’s clear long-term intention is to move towards compulsory payrolling of benefits wherever possible.
6 July deadline for making good
The general deadline of 6 July following the end of the year for making good the value of taxable benefits makes a lot of sense, since that is also the P11D submission deadline and is more generous than the Government’s original proposal of 1 June. The 6 July deadline will apply to all BiKs subject to the general charging provisions and in particular:
• non-cash vouchers;
• credit tokens;
• residential accommodation of any value;
• cars;
• vans; and
• fuel for company cars and vans.
Beneficial loans unchanged- no fixed deadline
The one major exception to this change relates to loans provided by reason of employment. At present there is no strict legal time limit for paying interest on an employment-related loan: an employee who pays interest after the amount of the benefit has been assessed can claim under Income Tax (Trading and Other Income) Act 2005 s 191 for the benefit assessed to be reduced accordingly.
Payrolled benefits- no change
The general deadline for making good payrolled benefits remains the end of the tax year, 5 April.
As noted above, employees may make good car, fuel or van benefits up to 1 June after the end of the tax year: this will not change in 2017/18.
Benefits that cannot be payrolled
there is no change to the exclusion from payrolling of:
• non-cash vouchers;
• credit tokens; and
• residential accommodation.

Overall, more than a faltering step in the right direction but the way ahead is still long and winding


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