The Government recently announced that particular salary sacrifice employee benefits, such as mobile phone contracts, health checks, company cars and gym memberships, will lose their tax relief status.
Salary sacrifice schemes are provided by many employers to save staff money and help spread costs. In return for part of your salary, your employer gives you a non-cash benefit. As this is taken out of your pre-tax pay, you are spared paying tax and national insurance (NI) on it.
However, the Chancellor Philip Hammond announced sweeping changes in the Autumn Statement. Most schemes will soon be taxed, cutting employees’ savings on tax and NI.
If you are already on a salary sacrifice scheme or join one before 4th April 2017, you may be able to keep the tax benefits for a while. Most schemes stay tax-free until April 2018; those relating to cars, accommodation or school fees until April 2021.
On a positive note, pension, childcare, cycle-to-work and ultra low-emission car schemes are protected and will continue to offer employees tax and NI savings.
For advice on salary sacrifice, employee benefit schemes or any other HR issues, contact Business Garage on 01235 433099 or [email protected]