Treasury reviews taxation of employee expenses for uniforms

The Treasury is consulting on whether to alter the tax rules for employee expenses as the cost for tax relief on expenses, which are not reimbursed by the employer such as uniforms and additional travel expenses, now cost the Exchequer £800m a year

As announced at the Autumn Statement 2016, a call for evidence has been published to better understand the use of the income tax relief for employees’ business expenses, including those that are not reimbursed by their employer.

The tax relief on expenses which employers do not reimburse and employees then claim from HMRC costs the Exchequer £800m per year, and there has been a 25% increase in claims between 2009-10 and 2014-15.

When employers reimburse expenses themselves it does not need to be reported to HMRC so the government has limited data on how much the tax relief on reimbursed expenses is worth.

Currently, the government has no plans to remove the relief on employee expenses.

The call for evidence has been arranged to help the Treasury understand:

  • if the current rules and administration can be made clearer and simpler;
  • whether the current tax rules are fit for purpose in the modern economy; and
  • why the cost to the Exchequer has increased.

The consultation questions will focus on current employer practices, current tax rules and the future of the tax reliefs.

The government will use the information gathered from the call for evidence to inform potential future policy development.

The deadline for responses is 12 June 2017.

Taxation of employee expenses call for evidence is available here


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