Salary sacrifice is a term applied to benefits taken in place of salary. In many respects these benefits provide employees with higher “take home” value than if the benefits were treated the same as cash income. Mr Hammond is mindful to curb this practice as it is intended that the change will add £1bn a year to tax revenues by 2020.
No definitive list of benefits affected has been published, but benefits that may no longer be tax effective are:
· Mobile phones and tablets
· Car parking
· Gym membership, and possibly
· Health check-ups
There are a number of benefits that will not be affected by these changes. They are:
· Child care
· Cycle to work schemes
· Ultra-low emission cars (CO2 emissions up to 75g/km)
Benefits in place before April 2017 will be protected from restrictions for 1 year, and arrangements in place before April 2017 for cars, accommodation and school fees will be protected for up to 4 years.
For those who contribute towards or make-good their benefits to reduce the taxable amounts, they will have until the 6 July after the tax year to do so – starting 6 July 2017. This only applies to benefits not already taxed as income through payroll.
Readers who are concerned they will be affected by these changes should consider a review of their salary sacrifice/benefits arrangements prior to the April 2017 cut-off date.
- Employment of someone to work in your home - January 27, 2022
- Are you eligible for local authority grants? - January 25, 2022
- Self-employed tax twisters - January 19, 2022
- Landlords and tax – the basics - January 18, 2022
- More time to file tax returns and pay tax due - January 13, 2022
- Are you registered to use MTD for VAT? - January 11, 2022
- Don\’t forget to declare COVID-19 grants - January 6, 2022
- Will your earnings exceed any of these amounts in 2021-22? - January 5, 2022