From 6 April 2017 there will be changes to the income tax and employers’ NI advantages that are currently applicable to some salary sacrifice schemes and they will be limited; below are the benefits in kind (BiKs) that won’t be affected:
The BiKs which will continue to attract income tax and employers’s NI advantages are:
- employer-provided pension savings
- employer-provided pensions advice
- childcare vouchers, workplace nurseries and directly contracted childcare
- bicycles and safety equipment provided under the cycle to work scheme, and
- ultra-low emission cars
NB: The changes don’t apply to any BiKs that are offered on top of an employee’s salary – they are only applicable to those schemes where the employee gives up some of their salary in exchange for benefits in kind!
For existing schemes, any arrangements that are already in place by 5 April 2017 will be protected until 6 April 2018. Those which relate to accommodation, cars and school fees will be protected until April 2021.
Where you have an employee who wishes to enter in to a salary sacrifice arrangement, they should seek their own tax advice, it is not your responsibility to give them the appropriate advice.