The proposed changes you need to know about over the next few months
Proposed changes where benefits are provided under salary sacrifice arrangements
The government has published draft legislation to limit the tax and NIC advantages for certain benefits provided under salary sacrifice arrangements by taxing the higher of the salary forgone or the value of the benefit from 6 April 2017.
The main benefits that will not be affected will be pensions (including advice), childcare, Cycle to Work schemes and ultra-low emission cars.
Arrangements in place before April 2017 for cars, accommodation and school fees will be protected until April 2021, with others being protected until April 2018.
As you can see, there is a limited opportunity to continue with salary sacrifice arrangements and a need also to consider the choice between keeping such arrangements in place – which may still be beneficial – or withdrawing from them.
Proposed changes for public sector engagements
The government has published draft legislation that will affect services supplied to the public sector through personal service companies (PSCs).
At present, the PSCs decide whether PAYE and NIC are due on payments from engagements with public sector bodies. The onus will be moved to the payer from 6 April 2017. This might be the public sector body itself, but is more likely to be an intermediary such as agency.
Organisations that are subject to the Freedom of Information rules will be treated as public sector bodies.
For information about any of the issues in this update please speak to your usual Grant Thornton adviser or a member of our Employer Solutions team.