From 6 April 2017 the government will limit the income tax and employer NICs advantages where:
- benefits in kind are offered through salary sacrifice or
- where the employee can choose between cash allowances and benefits in kind.
The taxable value of benefits in kind where cash has been forgone will be fixed at the higher of the current taxable value or the value of the cash forgone.
The new rules will not affect employer-provided pension saving, employer-provided pensions advice, childcare vouchers, workplace nurseries, Cycle to Work and ultra low emission vehicles (under 75 grams of CO2 per kilometre).
Those already in salary sacrifice contracts at 6 April 2017 will become subject to the new rules in respect of those contracts at the earlier of:
- an end, change, modifications or renewal of the contract
- 6 April 2018, except for cars, accommodation and school fees when the last date is 6 April 2021.
The new rules will generally only apply where cash is being given up in exchange for a benefit in kind. However where an employee is offered the alternative of a benefit or a cash allowance in lieu of the benefit, this may be affected by the new rules.
If you would like advice on remuneration planning please do get in touch.