Finance Bill briefing: exemptions for expenditure deductible from employment income

The ATT has produced a Finance Bill briefing on clauses 20 and 21, which make changes to exemptions for expenditure deductible from employment income.

We welcome the new statutory Income Tax exemption for the provision of home working equipment, eye tests and related special corrective appliances, and flu vaccinations. Equivalent regulations are being introduced for National Insurance purposes.

The ATT has called for such a change for several years, as it will give specific relief for those costs, regardless of whether arranged directly by the employer or reimbursed to the employee. This will create consistency in the Income Tax and National Insurance treatment of providing home working equipment, eye tests and related special corrective appliances and flu vaccinations. 

However, we do feel that the government should give consideration to extending the exemption for flu vaccinations to include COVID vaccinations. COVID vaccines often cost more than flu vaccines, so the trivial benefits exemption (which sets a £50 limit) is unlikely to be available in most cases. We believe that expanding the scope of the exemption to include COVID vaccines could encourage employers to offer these, which could reduce workplace absences.

The ATT also welcomed the continued ability for employers to reimburse genuine additional homeworking costs without Income Tax or National Insurance implications. However, we highlighted how the £6 per week fixed rate allowance that can be paid does not take account of increases in household costs since April 2020.  

Energy prices, in particular, have risen significantly since then – the Energy Price Cap for a dual-fuel, direct debit customer with typical consumption has risen by more than 61% since April 2020 – which means that employees may be out of pocket based on the increased energy costs being incurred whilst working from home.