Bosses failing on salary sacrifice changes

Many of Scotland’s employers are unprepared for sweeping changes to the “salary sacrifice” scheme due to take effect in the new year, experts have warned.

The Chancellor Philip Hammond formally announced changes to the system in his Autumnstatement,effectively scrappingmostofthearrangements currently in place.

The programme enables staff to give up part of their salary in return for benefitsin-kind, ranging from dental insurance to bicycle hire. It essentially enables people to bypass certain tax and national insurance payments, meaning “perks” such as insurance and childcare can be substantially cheaper.

Estimates suggest that salary sacrifice has been costing the UK government more than £15 billion a year, prompting the recently unveiled changes. The move means that from April 2017, employers will need to ensure that staff are fully aware of what benefits they are and are not entitled to.

Monica Houston, tax manager at accountant and business adviser Grant Thornton in Scotland, said: “The end of salary sacrifice was widely predicted, but it doesn’t mean it’s impact won’t be felt by many employers and employees throughout Scotland. The good news is that some of the most popular benefits will still be available such as childcare.”

She added: “Arrangements in place before April 2017 for certain benefits will also be protected but employees need to assess their position now to see what impact the changes will undoubtedly have on their net cash position.” 0 Changes to system were made by the Chancellor