On 10 August 2016 the UK issued a consultation document looking at possible effects of changing the way benefits apply when a benefit in kind is provided in relation to a salary sacrifice or flexible benefit scheme. The government is considering a limit on the range of benefits in kind that would be subject to relief from income tax and national insurance contributions when they are provided to the employee as part of a salary sacrifice scheme. The consultation looks at the potential impact on both the employer and the employee of these potential changes.
The changes would aim to charge benefits in kind to income tax and employer’s (Class 1A) national insurance contributions to the extent that the normal taxable value of the benefit in kind is higher than the amount of salary sacrificed.
Employer pension contributions; pension advice provided by employers; employer support for childcare and the provision of workplace nurseries; and cycles and cyclist’s safety equipment provided under the cycle to work scheme will not be affected by any new measures. Also payroll giving would not be affected by the changes.
The government is asking for input on issues such as any different impact on different businesses such as large companies or small and medium enterprises (SMEs); or any different impact depending on the nature of the benefit. Information is also requested on any types of salary sacrifice arrangement that do not strictly involve the receipt of a benefit.
Comments from interested parties are invited by 19 October 2016.
