Non-payrolled benefits in kind- time limit for making good withdrawn from the Finance Act

Thu 11 May 2017

The loss of draft Finance Bill 2017 Clause 3 (when the draft Finance Bill clauses were published) leaves proposals to change the time limits for making good certain benefits in kind (BiKs) in limbo. These were uncontroversial proposals which would have made time limits more consistent if not yet uniform but fell victim to the time pressure that resulted from the snap General Election.

The possibility remains that the ‘discarded’ Cl.3 will re-emerge in a new post-election Finance Bill largely unchanged and in practice the new deadlines for making-good will still be introduced as planned. The earliest year that was to be affected by Cl.3 was, and may well still be the current year, 2017/18 which would not cause major logistical problems in practice since the change would introduce a making-good time limit which would not fall until the 2017/18 P11D deadline of 6 July 2018.

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.