Tax & remuneration – why is it so complicated?

Posted by RM2 at 15:51 on 30 Jun 2014


Straightforward cash remuneration for employees is a thing of the past. Companies use a plethora of ways to reward and incentivise employees – and share schemes are just the tip of the iceberg. Pension schemes, company cars, gym membership, flexible leave, medical insurance, travel cards, childcare vouchers – some or all of these can form part of the package for employees. And each benefit requires a careful review of the tax and national insurance treatment, which can differ widely.

In the past few years, the Office of Tax Simplification (OTS) which has looked at some specific areas of taxation, including reviewing share schemes and implementing a number of changes and improvements to share plans legislation. Those changes are ongoing and we believe that, ultimately, they will result in an easier life for companies implementing and administering share plans.

Now the government is looking at a broader question and are seeking evidence on remuneration of employees and directors generally. Their aim is to improve their understanding of how employees and directors are remunerated, which will inform decisions when developing future tax policy.

The call for evidence published by the Treasury on 18th June asks a number of questions including:

  • What types of remuneration are currently commonly used?
  • Are there any payments or benefits in kind that should not be treated as remuneration for tax and NICs purposes?
  • What are the main objectives for determining remuneration practices?

We all complain about paying tax, and about how complicated it is. Here’s an opportunity to make your thoughts on employee taxation known. The consultation closes on 9th September and you can find out more, here.