Critics of the current system say it doesn’t reflect reality
The Government has issued an update about tax changes affecting UK air travel. The policy update could impact journeys with major airlines such as Ryanair and EasyJet. The ministerial response comes after major concerns were raised about the current system, which campaigners branded “completely unfair”.
The Treasury has issued a response to a petition to Parliament that garnered more than 10,000 signatures calling for a review of the scale rate expenses paid to employees who travel outside the UK, such as airline cabin crew. These scale rate payments are where a business provides an employee with a set amount of cash, to cover business expenses such as travel and meals, so the worker does not have to provide receipts for each item. The petition called for ministers to “review and increase” the expenses rates. The campaign said: “We feel the rates are not reflective or the real costs for people whose work takes them abroad, and that the way they are put into blocks of 5/10 or 24 hour blocks is completely unfair.
“We want these rates to be reviewed by HMRC so they are up to date with the current cost of living.” These time blocks refer to the fact there are different rates that apply depending on the length of time the expenses relate to. There are different rates for a period of more than five hours but less than 10 hours, another one for more than 10 hours but less than 24 hours, and still another rate for a period of more than 24 hours.
The petition goes on to make the case why the current system is unfair: “If a flight is delayed by an hour this can mean dropping from the 24 hour payment down to the 10 hour payment so essentially working 12 hours without a payment. This is a common occurrence in air travel, hence crew being penalised for something out of their control.
“We believe the scale rates need to provide a wider range of rates and time blocks so that if you fall between rates you are not penalised.” Just over 11,000 people have pledged their support for the petition at the time of writing. If a petition reaches 10,000 signatures, the Government is obliged to pen a response.
You can read the petition in full
Government response
The Treasury has now issued a reply. On the question of whether there could be changes to HMRC’s policies in this area, the group said: “The Government keeps all taxes under review as part of the policy making process.
“Any decisions on future changes in this area will be taken in the context of the wider public finances.” The group also set out the reasoning behind the current scale rates system.
The Treasury said: “Overseas scale rates (OSR) allow employers to reimburse overseas travel costs without receipts. Where costs exceed rates, receipts can be used. The Government keeps OSR under review. The Government recognises that employees who travel overseas for work, including cabin crew, incur additional costs and that employers need practical ways to reimburse those costs fairly.
“HMRC’s overseas scale rate system is intended to support this by providing a consistent, evidence based framework for tax free subsistence payments where employees are travelling abroad as part of their role.” The Government body went on to explain that the scale rates are not intended to reflect a person’s expenses in every case, but instead provide a “standard set of benchmark amounts” that employers and employees can use.
Bespoke rates
Further explaining the rules, the response set out: “Employers are not required to use HMRC’s published scale rates if they believe these do not reflect their employees’ circumstances. Employers can agree bespoke rates with HMRC based on evidence of actual costs, or they can reimburse the actual costs incurred where receipts are available.
“These alternatives allow employers greater flexibility where working patterns, disruption or sector specific issues mean the standard rates are not appropriate.” You can sign the petition on the website.
