Don’t worry yet about ‘salary sacrifice’ changes
QAI currently give staff flexibility in how they construct their packages, including offering things like health screening, gym membership and pensions instead of salary as this is more tax efficient for them. I understand the rules are changing next year. What do I need to do? IN the Autumn Statement the Chancellor announced that the rules on so-called ‘salary sacrifice’ were being tightened in response to perceived abuse.
The first thing to note is that there have currently been no changes – only an announcement about how these ‘perks’ will be taxed from April 2017.
The second is that in a number of areas the Chancellor is consulting on the changes so there is still a lack of clarity.
What is clear is that some areas of ‘salary sacrifice’ will no longer attract a tax benefit.
However, even where the tax benefit is removed, there remains a National Insurance benefit for many employees. I would expect many of your staff to continue with a flexible approach to their packages so as to make best use of the remaining tax advantages.
Additionally, research has shown that there is a wider business benefit to such a structure as a happy workforce is likely to be more productive. Many employees also appreciate these sorts of benefits come direct from the employer so that they do not have to think too hard about whether to purchase them or not. I don’t believe you now need take any drastic action but keep in touch with your accountant or me – and keep an eye for any developments