LinkedIn page
0 £0.00
This item was added to your bag
Reward Strategy. Incoporating Payroll World.

What is the future for salary sacrifice?

The proposed changes to salary sacrifice are wider in scope than was originally anticipated and could have a significant impact on those who operate these schemes and their employees

Ian   Holloway
TwitterLinkedIn
Ian   Holloway
TwitterLinkedIn

The proposed changes to salary sacrifice are wider in scope than was originally anticipated and could have a significant impact on those who operate these schemes and their employees. Those who have concerns regarding these changes need to make representations in the consultation process, says Alastair Kendrick

 

We have recently seen a further consultation document issued by HMRC which follows the previous announcement in the Budget regarding the removal of the tax and NICs advantages of salary sacrifice. The consultation period runs to the 19 October 2016 and we are expecting an announcement of the decision in the Autumn Statement in November, with any changes to the tax rules introduced at April 2017.

 

What we know so far is that certain salary sacrifice arrangements have been safeguarded, with these including:

 

• Pensions
• Childcare vouchers
• Cycle to Work scheme

 

HMRC is saying it is not its intention to end salary sacrifice altogether, but rather remove any tax/NICs breaks on the items involved.

 

HMRC has not yet announced whether it will be its intention to stop the tax relief for those who are currently signed up into a salary sacrifice scheme or just to not permit tax or NICs relief for those wanting to join a scheme after April 2017. This is a crucial question because if grandfathering is not permitted, this will have a significant impact on those employees who are in salary sacrifice schemes at present and could mean quite a substantial financial cost to employees who have opted for items like a company car.

 

The consultation document and discussions surrounding it have highlighted that HMRC intends to expand the new rules to include those who are in a flexible benefit scheme, and also employees who have a right to cash or a company car in their contracts of employment. This significantly widens the scope and will potentially have an impact on a large number of employees.

 

In the case of cash or car arrangements, those who opt for a company car will (if HMRC’s proposals are accepted) be taxed on the greater of the cash alternative they are offered or the taxable benefit on the company car they are provided with. This is not good news and identifying those employees who could be affected could be time-consuming.

It is clear that HMRC still does not fully understand the number of employees who these proposed changes will affect.

 

If you have views of the future of salary sacrifice, it is important that you let HMRC have your comments and evidence. Such evidence should be provided prior to the deadline of 19 October 2016.

 

The Autumn Statement is shaping up to be significant for the future of employment taxes so it will be worth following closely on 23 November.

Read More

What is the future for salary sacrifice? What is the future for salary sacrifice?
TwitterLinkedIn
Add New Comment
LoginRegister

MORE STORIES

Age discrimination policies make “no difference”, say employees aged 50+

Age discrimination policies make “no difference”, say employees aged 50+

8% of women sexually harassed at work report it, study finds

8% of women sexually harassed at work report it, study finds

UK first: Bereaved parents entitled to paid leave

UK first: Bereaved parents entitled to paid leave

Upcoming events

Payroll Autumn Update

Payroll Autumn Update

The Rewards

The Rewards

AVAILABLE TRAINING

International in Country Training

International in Country Training

Reward Strategy homepage
Reward Strategy RSS

Did you find our website useful?

Thank you for your input

Thank you for your feedback

reward-strategy.com - an online news and information service for the UK’s payroll, reward, pensions, benefits and HR sectors. reward-strategy.com is published by Shard Financial Media Limited, registered in England & Wales as 5481132, Axe & Bottle Court, 70 Newcomen St, London, SE1 1YT. All rights reserved. Reward Strategy is committed to diversity in the workplace.
© Copyright Shard Financial Media Ltd