All change for salary exchange? Have your say
Back in the 2016 Budget, the Government announced that it was again considering making changes to the tax treatment of salary exchange/sacrifice for benefits in kind and in August it published its proposals.
From 6 April 2017, the Government intends that all benefits that currently enjoy tax and NIC exempt status under employment tax rules will lose that status when provided via salary exchange. This could impact benefits such as mobile phones provided for private use, work related training and workplace car parking.
However, arrangements where employees exchange salary for employer pension contributions, childcare and health-related benefits (such as cycle to work) should continue to benefit from income tax and NICs relief. Also, for other benefits that generate the same tax charge as the cash exchanged to receive them (usually the case for flexible benefit schemes) it would appear that the position remains unchanged. In cases where this is different, for example where a company car delivered by a salary exchange, tax will be calculated on the benefit in kind chargeable or on the cash amount given up (if higher).
So how will the affect employers? Well that depends on the benefit package you offer to your employees. We are conducting a survey to assess how employers currently use salary exchange arrangements and what the changes are likely to mean for them and how they plan to adapt. To take part and receive a copy of our findings please visit Salary Exchange survey.
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