Government revamps salary sacrifice benefits - Mitrefinch


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Government revamps salary sacrifice benefits

Published: November 16, 2016

The government has confirmed planned changes to the salary sacrifice arrangements scheme.

Details were revealed in the Autumn Statement that will restrict the number of benefits allowable under the tax-efficient arrangements.

The changes will mean some staff will not be able to take advantage of lower tax and national insurance on benefits.

However, it is understood childcare, bikes-for-work and pensions will be exempt from the changes, while eligibility for cars, accommodation and school fees will be gradually removed.

Chancellor Philip Hammond said: “The government will take action now to reduce the difference between the treatment of cash earnings and benefits.

“The majority of employees pay tax on a cash salary. But some are able to sacrifice salary and pay much lower tax on benefits in kind. This is unfair, so from April 2017 employers and employees who use these schemes will pay the same taxes as everyone else.

“Following consultation with stakeholders, ultra-low emission cars, pensions saving, childcare and the bikes-for-work scheme will be excluded from this change. And certain long-term arrangements will be protected until April 2021.”

Mitrefinch can provide payroll solutions to help ensure companies keep up-to-date with the latest HMRC guidance.

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