Editorial for Newsletter #370Sunday, April 26th, 2009
This week’s newsletter has a maternity slant, with items that look at further European proposals for improving maternity rights and HMRC’s latest guidance on the taxation of benefits provided during maternity and adoption leave.
This second guidance document from HMRC is altogether better reasoned that its predecessor. The May 2008 document, despite being acclaimed as an example of cross-department cooperation, was a confusing mix of employment law and tax law. The Department for Business (BERR) should be explaining the complexities of employment law, and HMRC should confine itself to explaining the tax consequences. The latest document clarifies a number of relatively rare situations but at least it confines itself to tax law.
There is an interesting side point in HMRC’s document that I have not seen mentioned before. Because an employee’s earnings are generally much lower during maternity or adoption leave, there is the possibility that some of the benefits that continue to be provided during the leave period are not taxable, even though they would be taxable if the employee were working normally. See what you think.
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