Need for reform on taxation of accommodation benefits and termination payments
The Office of Tax Simplification (OTS) is calling for a major review of the tax position on accommodation benefits and termination payments. The current rules are complex and can be unfair.
The rules on accommodation benefits are “inconsistent and difficult to apply”. Actually calculating the tax charge is difficult and the rules are outdated, often relying on 1973 rateable values and a £75,000 value for expensive (!) properties.
The OTS report proposes taking the most basic accommodation out of the charge to tax and calls for reform of existing exemptions. A better way to assess any benefit could be to use market rental.
On termination payments, most people assume that any payment is tax free up to £30,000, which is not always the case. The OTS wants to link the exemption to statutory redundancy payments.
The report also flags up other issues including the need to increase the amount of tax-free removal expenses; the requirement to reform the tax rules round long service awards; and tackling authorised mileage allowance payment rates.
The full report is available here.
Date: 13th August, 2014
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