Benefits, such as private medical & pension contributions, are often provided to employees by way of a salary sacrifice arrangement, giving a tax and NIC benefit to employer and employee.
It was confirmed in the 2017 Budget that salary sacrificed in exchange for the provision of certain benefits will be taxed as if they had been paid in cash.
There are some transitional provisions:
Salary sacrifice arrangements that were entered into before 6 April 2017 will remain effective for tax purposes until 6 April 2018; and
Salary sacrifices for cars with CO₂ emissions above 75g/Km, accommodation and school fees that were entered into before 6 April 2017 will remain effective until 6 April 2021.
Salary sacrifice can continue unchanged for many items including pension contributions, childcare vouchers and cycle to work.
The key point for employers will be to ensure that changes are not made to existing salary sacrifice arrangements, which could accelerate the changes to the tax treatment.
For more information, please contact Lesley Sutton on 01484 550037 or email firstname.lastname@example.org.