Welcome to the August 2020 Newsletter from Beatons Group

Following criticism from the Treasury Select Committee, HMRC has abandoned its plan to make workers pay income tax on coronavirus (COVID-19) testing kits purchased by their employer.   

Meanwhile, Chancellor Rishi Sunak has asked the Office of Tax Simplification (OTS) to carry out a review into capital gains tax (CGT) in order to ascertain how it can be simplified. The Chancellor requested that the OTS review CGT and aspects of the taxation of chargeable gains in regard to individuals and small businesses.

HMRC scraps benefit-in-kind charge on coronavirus tests

The government recently scrapped plans to get workers to pay income tax on COVID-19 testing kits purchased by their employer.

HMRC issued guidance on 6 July which outlined that COVID-19 testing kits were to be classified as a taxable benefit-in-kind. However, the Treasury Select Committee criticised this decision and highlighted that tax bills could build up as employers purchase large numbers of tests.

Mel Stride, Chair of the Treasury Select Committee, said: 'Many employees, especially healthcare and hospitality workers, are required to undergo regular coronavirus testing.

'Many of our key workers could be faced with the perverse incentive of avoiding employer-sponsored tests in order to reduce their tax bill. This cannot be right.'

A spokesperson for the Treasury said: 'Given the importance of widespread testing, we want to ensure that all employers who wish to provide third-party testing to their employees can do so without increasing their tax liability.

'So we will introduce a new income tax exemption for COVID-19 antigen tests provided by employers.'

HMRC guidance states that if an employer is providing antigen testing kits to their employees outside of the government's national testing scheme, either directly or by purchasing tests that are carried out by a third party, no income tax or Class 1A national insurance contributions (NICs) will be due.

Information on the tax treatment of certain expenses and benefits provided to employees during the pandemic can be found here.

Chancellor asks OTS to review capital gains tax

Chancellor Rishi Sunak has asked the Office of Tax Simplification (OTS) to carry out a thorough review of capital gains tax (CGT).

In a letter to the OTS, the Chancellor requested that the independent office review CGT and aspects of the taxation of chargeable gains in regard to individuals and small businesses. Mr Sunak requested that the review identifies and offers advice on the opportunities to simplify the taxation of chargeable gains to 'ensure the system is fit for purpose'.

In the letter, the Chancellor said that he would be interested in proposals from the OTS on the regime of allowances, exemptions, reliefs and the treatment of losses within CGT, in addition to the interaction of how gains are taxed compared to other types of income.

The OTS recently published a call for evidence in the form of an online survey, which seeks to gather views on CGT. The OTS wants to hear from businesses, individuals, professional advisers and representative bodies on which aspects of CGT are complex and difficult to get right, as well as suggestions in regard to how the tax can be improved.

The call for evidence comes in two sections: the first seeks high-level comments on the principles of CGT by 10 August 2020, while the second and primary section of the document invites more detailed comments on the technical detail and practical operation of CGT by 12 October 2020.

More information on the survey can be found here.

ESSENTIAL TAX DATES FOR AUGUST

2 August
Deadline for submitting P46(Car) for employees whose car/fuel benefits changed during this quarter to 5 July 2020.

19 August
PAYE, Student loan and CIS deductions are due for the month to 5 August 2020.

QUOTE OF THE MONTH

'Every Budget we get tax breaks announced like baubles hung on a tree and they generate great headlines, but the truth is the government has little clue about the value of an enormous cost to the public purse.'

WEBSITE OF THE MONTH

www.cityam.com

Provides information on topical tax and business issues.

ON OUR WEBSITE

A wealth of resources for businesses
With topics ranging from capital allowances to the Construction Industry Scheme, the Your Business section of our site is a hub of essential information.

Useful information for individuals
For a comprehensive bank of guides covering giving to charity, making a Will and much more, please visit the Your Money area of our website.

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