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Autumn Statement 2016 - Benefits in kind and salary sacrifice – tax changes

The Chancellor has confirmed in his Autumn Statement the changes to the tax position on benefits in kind provided under salary sacrifice arrangements. From April 2017, with some protected exemptions e.g. childcare, any benefit provided by way of salary sacrifice will be taxable on the greater of the amount of salary sacrificed and the cash equivalent as laid down by the tax legislation. On that basis, for example, a mobile telephone provided by salary sacrifice would be taxable on the amount of salary sacrificed to obtain it as under the tax legislation the provision of such a telephone is exempt.

It follows, therefore, that any provision of benefits in kind and salary negotiation will need to be carefully managed to ensure that a composite package is agreed that does not involve a salary sacrifice unless the tax exemption for such benefits is to be lost.

 

 

Date: 23rd November, 2016
Author: Cathy Corns

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