Employer update


Written by: Mark Abbs

The government will consider how the system could be made fairer between workers carrying out the same work under different pay arrangements and specifically how the taxation of benefits in kind (“BIK”) and expenses could be made fairer and more coherent.

Autumn Statement 2016

Update on salary sacrifice arrangements

The government will take the following action:
  • Salary sacrifice – following consultation, the tax and employer National Insurance advantages of salary sacrifice schemes will be removed from April 2017, except for arrangements relating to pensions (including advice), childcare, Cycle to Work and ultra-low emission cars. This will mean that employees swapping salary for benefits will pay the same tax as the vast majority of individuals who buy them out of their post-tax income. Arrangements in place before April 2017 will be protected until April 2018, and arrangements for cars, accommodation and school fees will be protected until April 2021.
  • Valuation of Benefits in Kind – the government will consider how BIK are valued for tax purposes, publishing a consultation on employer-provided living accommodation and a call for evidence on the valuation of all other BIK at the Budget 2017
  • Employee business expenses – the government will publish a call for evidence at the Budget 2017 on the use of the income tax relief for employees’ business expenses, including those that are not reimbursed by their employer.