Changes to the taxation of salary sacrifice schemes favour employer imposition over employee choice although the government has ringfenced pensions so that for the time being they are protected, says Tim Stovold, head of tax at Kingston Smith
On 10 August we finally received the HMRC consultation document on salary sacrifice schemes.
This follows a warning in the Summer Budget 2015 that, ‘the government will actively monitor the growth of these schemes and their effect on tax receipts’.
In the Autumn Statement the Chancellor said that ‘the government remains concerned about the growth of salary sacrifice arrangements and is considering what action, if any, is necessary’. More recently, we were told in the Budget 2016 that ‘the government is considering limiting the range of benefits that attract income tax and NICs advantages when they are provided as part of salary sacrifice schemes’.
After more than a year of non-committal updates from HMRC, it was thought that this project may have been kicked permanently into the long grass but the changes suggested in the consultation document to apply from 6 April 2017 will kill a number of salary sacrifice schemes stone dead.
