Consultation on tax changes to benefits in kind provided as part of salary-sacrifice arrangements

Close date: 19 October 2016

The Government consults on its proposals to limit the range of benefits in kind that attract income tax and national insurance contributions (NICs) advantages when provided as part of a salary sacrifice or flexible benefit arrangement. The Government proposes to change tax legislation so that where a benefit in kind is provided through these arrangements it will be chargeable to income tax and Class 1A employer NICs. The new rules will not apply to employer pension contributions, employer-provided pension advice, employer-supported childcare and childcare vouchers, ultra-low emission cars and cycle to work schemes. Intangible benefits, such as additional annual leave and flexible working hours, are also outside the scope of this review.

The consultation seeks views on its proposals, including whether or not the proposed implementation date presents any difficulty for employers. The measure will be introduced in the Finance Bill 2017 and will be effective from April 2017.
Consultation document: Salary sacrifice for the provision of benefits in kind
Consultation response: Consultation on salary sacrifice for the provision of benefits in kind - Summary of responses