The Autumn Statement was announced today and there are some changes to a scheme that is used by a lot of employees and employers in the UK. The changes will take effect from 6 April 2017.
What Is Salary Sacrifice?
If you are benefitting from the Salary Sacrifice Schemes, you probably are already aware how this all works.
Tax and national insurance is calculated on your gross pay. Salary Sacrifice allows your employer to pay for certain items and recover the cost of these as a deduction from gross pay before these tax and national insurance is calculated. The benefit? You reduce your gross pay for tax and national insurance purposes because you get to pay for certain things from your gross rather than net pay. And your employer benefits because they pay less employers national insurance too. Everyone wins.
What items going to be removed from the Salary Sacrifice Scheme in the new tax year?
- Company cars
- Work-related training
- Car parking near your workplace
- Gym memberships
- Health screening checks
- Mobile phones, computers and other tech
- School fees
What items are going to stay as part of the Salary Sacrifice Scheme?
- Pension contributions
- Childcare vouchers
- Cycle-to-work schemes
- Ultra-low emission cars
Help, I’m benefiting from the Salary Sacrifice Scheme but it’s set to be excluded?
ALL salary sacrifice schemes in place at the moment will continue until at least April 2018. Any existing schemes which covers cars, accommodation and school fees will be tax-free until April 2021.
And remember if you are considering the use of a Salary Sacrifice Scheme which is going to be axed from 6 April 2017, it could be worth getting this put in place immediately so you can benefit from the arrangement until at least April 2018.