Salary sacrifice changes from April 2018

Source: HM Revenue & Customs | | 20/12/2017

The tax and NIC advantages of certain benefits provided as part of a salary sacrifice arrangement were removed from 6 April 2017. The new rules effectively remove the Income Tax and employer NIC advantages of certain benefits provided as part of salary sacrifice arrangements such as mobile phones and workplace parking.

When the changes were introduced it was confirmed that all arrangements in place before April 2017 will be protected for up to a year. This means that current contracts that remain under the pre-2017 rules will fall under the new rules from April 2018. The April 2018 deadline is extended until April 2021 for cars with CO2 emissions above 75g/km, accommodation and school fees. Where an existing contract is varied, renewed or modified then the new rules immediately begin to apply.

The following benefits are not currently affected by the new rules:

  • Employer provided pensions and pensions advice
  • Childcare vouchers
  • Employer provided childcare or workplace nurseries
  • Bicycles and cyclist safety equipment including cycle to work schemes, and
  • Ultra-low emission cars, below 75g/km

Planning notes

Employers and employees are still free to use salary sacrifice, but with the tax and Class 1A NICs advantages removed. Also, employees can reimburse their employer for the cash value of any benefit, after the end of the relevant tax year.



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