OFFERING EMPLOYEE BENEFITS VIA SALARY SACRIFICE?
HMRC Consulation on Salary Sacrifice for the provision of Benefits in Kind
…time to review your employee benefit schemes
As you may know, HMRC has recently launched a Consultation on Salary Sacrifice. Some key benefits are oustide the scope; pension, childcare, financial advice and cycles, but all other benefits, if offered via salary sacrifice, are caught.
If the proposals go ahead there will be three major consequences for Employers:
- the 13.8% employer National Insurance saving will be lost
- flexible benefits plans will no longer be allowed to exchange tangible benefits for cash
- Tax and NICs will be applied on the value of a benefit obtained via salary sacrifice even if that benefit is otherwise exempt from a Benefit in Kind charge (e.g. health screening, workplace gym)
The Consultation ends in October 2016 and the outcome is expected to be confirmed by legislation and come into effect in April 2017.
This has the potential to dramatically affect the financial justification for some flexible benefit schemes and/ or the rationale for offering certain benefits. Employers are strongly advised to start reviewing their existing arrangements now in order to allow time for contingency plans and to take a considered approach on any changes and the associated employee communications.
If you want to understand more about the potential implications on your benefits package please contact your Broadstone Client Relationship Manager, or contact us as shown below for more information:
Tel: 020 3869 6808
Tel: 020 3869 6805