Budget 2016 - Salary Sacrifice

The announcement that the Government is considering limiting the range of benefits that attract income tax and NIC advantages when provided under salary sacrifice schemes, comes as no surprise to me.  HMRC has been looking at salary sacrifice with increased interest over the past year. While the devil will be in the detail, it's clear that when it comes to salary sacrifice HMRC take a view that there is a clear "Good, Bad and Ugly".

Employers will be delighted to see that pension savings, childcare and cycle to work are clearly in the category of the "Good" salary sacrifices. However, we are suggesting that employers with wider salary sacrifice arrangements and flexible benefit schemes take the time now to review what they are offering so as to ensure that the benefits do not fall into HMRC's "Bad" salary sacrifices and that they continue to operate as intended in order not to be deemed as "ugly" by HMRC.

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