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HMRC has published a discussion paper on the taxation of travel and subsistence payments.
The paper proposes principles for the new rules, including that relief should be for business travel and not ordinary commuting, and that the rules should be simpler and more objective.
A consultation was launched in July 2014 regarding the taxation of travel and subsistence payments. It forms part of a larger review of tax treatment of employee benefits in kind and expenses, and a call for evidence of remuneration practices. Whilst the July consultation was due to close in February 2016, the government has now launched a discussion paper.
The discussion paper reaffirms that the purpose of the review is to assess ways to modernise the rules regarding the taxation of travel and subsistence payments 'in order to make them easier for employers to understand and to apply in practice, while reflecting contemporary practices in the labour market'.
The paper identifies that the current rules for taxation of travel and subsistence payments, which have not changed substantively since April 1998, are out of date and very complicated. The government has identified that any new rules should uphold the following principles:
Tax relief should continue to be available for business travel but not ordinary commuting.
Any test should be objective and based on measurable facts.
The tests should not include the concept of permanent and temporary workplaces except where used with their everyday meaning.
For employers who travel to multiple locations which are far apart, the journeys should not be classed as 'ordinary commuting'.
Relief should not be available for subsistence which is essentially a private expense.
Any changes should not create an additional cost for the exchequer.
The discussion paper does not set out any firm proposals for reform but highlights various possibilities and invites responses by 16 December 2015. The full discussion paper can be accessed here.