Draft Finance Bill 2017 – Salary Sacrifice
Legislation will limit the income tax and employer NIC advantages where:
- Benefits-in-kind are offered through salary sacrifice; or
- Where the employee can choose between cash allowances and benefits-in-kind
The taxable value of benefits in kind where cash has been forgone will be fixed at the higher rate of the current taxable value or the value of the cash forgone.
The new rules will not affect employer-provided pension saving, employer-provided pensions advice, childcare vouchers, workplace nurseries, or cycle to work. Following consultation, the Government has also decided to exempt Ultra-Low Emission Vehicles which have emissions under 75 grams of CO2 per kilometre.
This change will take effect from 6 April 2017. Those already in salary sacrifice contracts at the date will become subject to new rules in respect of those contracts at the earlier of:
- An end, change, modification or renewal of the contract; or
- 6 April 2018, except for cars, accommodation and school fees when the last date is 6 April 2021.