Salary Sacrifice 2017
Relevant changes to Salary Sacrifice from 6 April 2017
In the Government’s Autumn Statement the Chancellor announced plans to change salary sacrifice schemes whereby employers support their staff with additional benefits through salary sacrifice. A whole range of benefits have been paid in this way historically from pension contributions and childcare to workplace car parking.
Salary sacrifice has long been an attractive offering for employees and a beneficial cost saving measure for businesses. Items such as mobile telephones and laptops could be provided by an employer and a salary reduction made with the effect that the employee bought them out of their gross rather than net income. The employer would benefit by saving the employer’s national insurance contributions on the salary reduction. The benefit is that both parties reduce their tax bills.
Basic tax exemptions for benefits in kind provided by employers are unlikely to be removed so mobile phones should still be capable of being provided to employees tax free. However, from 6 April 2017, that will only be the case if they are given on top of salary so the employer must bear the cost of the benefit in order to avoid the income tax and employer’s national insurance charges.
· Employees can save tax and NI on key products and services such as childcare vouchers, workplace nursery and cycle to work
· Employees can be provided with expensive items paid for up front by the employer eg mobile phones and computers
· Employees can receive corporate discounted rates on products and services and still save employee NI, eg gym membership and car parking
The table below sets out how the changes take effect
|Benefit||CurrentSaving||Savings from April 2017|
|ChildcareVouchers||Tax & NI||No Change|
|Workplace Nursery||Tax & NI||No Change|
|Cycle to work||Tax & NI||No Change|
|Gym Benefit||NI||No Change|
|Mobile Phone Benefit||NI||No Change|
|Enjoy Technology||NI||No Change|
|Will Writing||NI||No Change|
|Car Parking||Tax & NI||Removal of Tax but saving on NI|
|Dining Card||Tax & NI||Removal of Tax but saving on NI|
|Kids Pass||Tax & NI||Removal of Tax but saving on NI|
|Car Scheme||Tax & NI||Orders placed before the end of March save Tax & NI until 2021. For orders from April 2017 the current rules will only apply to plug in hybrids and electric vehicles (less than 75 Co2g/Km)|