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BUDGET 2016 – Salary Sacrifice, still highly effective

Salary sacrifice arrangements enable employees to give up salary in return for benefits-in-kind that are often subject to more favourable tax treatment than salary.

The Government wants to encourage employers to offer certain benefits but is concerned about the growth of salary sacrifice schemes. The Government is therefore considering limiting the range of benefits that attract income tax and NICs advantages when they are provided as part of salary sacrifice schemes.

However, the Government’s intention is that pension saving and childcare benefits should continue to benefit from income tax and NICs relief when provided through salary sacrifice arrangements.

At Dafferns we have advised many business and employees on salary sacrifice arrangement especially in relation to pensions and child care vouchers. Under such arrangements the employee can achieve income tax and employees NIC benefits whilst an employer can mitigate its employers NIC liability.

As such these type of salary sacrifice arrangements can be a “win win.” It is a relief that HMRC are allowing salary sacrifice arrangements for pensions and child care vouchers to continue.

If you want to discuss this in further detail please contact Brian King on 024 7622 1046 or e-mail brian.king@dafferns.com