Complex new Inland Revenue guidance notes detailing a revamp of travel and subsistence rules need further clarification, tax experts said this week.
The Revenue released a 100-page document last week, but accountants warned many employers face a massive challenge as they attempt to comprehend and comply with the new legislation before April.
The latest guidance follows 13 months of wrangling between the Revenue, employers and accountants since the measures were outlined in the November 1996 Budget. Pressure from the profession forced a government U-turn on proposals to tax employees on ‘triangular’ travel, which involved deducting commuting costs from travel expenses.
But Matthew Ellis, senior manager in Price Waterhouse’s employment tax services team, warned that many employees would be worse off.
He noted Revenue plans not to allow relief when an employee travels from home to a client unless the destination is more than ten miles from the office. ‘An arbitrary ten-mile limit will affect a lot of people living and working in London and other major cities.’
The so-called ‘40% rule’ – where travel expenses between home and a temporary place of work are allowable if the employee spends less than 40% of his time there – also needs clarification, said Ellis.
Bill Streeter, assistant director in the Revenue’s personal tax division, said the guidance was meant as a ‘rule of thumb’ but more changes were not anticipated. ‘We tried to provide answers to 75% of standard situations, and enough answers for sensible conclusions for the rest,’ he said.
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