The good news, the way in which benefits in kind are taxed – company cars, mobile phones, etc. – is unchanged for the tax year just ended, to 5 April 2017. Consequently, you can expect your tax position regarding any benefits you enjoy to be unchanged for 2016-17; as long as the benefits themselves have not changed.
Unfortunately, from April 2017, the taxman is tightening his grip, and many tax-free benefits will be taxed as if they were part of your salary – this will increase the combined income tax and National Insurance charges in many cases.
A number of benefits are not affected, and will continue to be classified as tax exempt. They are:
- Cars with emissions between 0 and 75g CO2 per kilometre.
- Childcare vouchers.
- Workplace nurseries.
- Employer pension contributions and pensions advice.
- Cycles and safety equipment under the cycle to work scheme.
- Intangible benefits that are not taxed, such as additional annual leave or flexible working hours.
- Counselling and other outplacement services on termination.
- Retraining courses.
It is fine for employers to continue providing other benefits after 5 April 2017, but there will no longer be any tax or National Insurance benefit in doing so – in other words, the benefits will be treated as if they were part of salary.
As always, when these changes occur there are transitional arrangements, a delay in the date on which the full tax and National Insurance charges will apply from. Where an arrangement is already in place on 6 April 2017, existing legislation will continue until the sooner of:
- When the arrangements are varied, renegotiated, revised or renewed (including auto-renewal), and
- 6 April 2021 for cars, vans, fuel, accommodation or school fees, or
- 6 April 2018 for any other benefit.
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