The rules for salary sacrifice arrangements changed with effect from 6 April 2017 and HMRC has updated their guidance for employers.
Apart from 5 exceptions the amount assessed as employment income for new salary sacrifice arrangements is now the greater of the salary foregone and the taxable benefit as set out in the tax legislation.
Fortunately, the two most common arrangements are unaffected by the changes – childcare vouchers and pension contributions.
The HMRC guidance reminds us of the importance of amending the employee’s contractual salary before the next salary payment. Remember also that the employee’s salary cannot be reduced below National Minimum Wage.
Remuneration packages for those in owner managed businesses have always been a blend of salary, benefits and dividends. Our tax and business experts at Beavis Morgan are available to work with you to understand your requirements and needs, together with those of your family, and put in place a legitimate structure which best meets those requirements within the framework of your business.
Contact Steve Govey or your usual Beavis Morgan Partner for further information and to discuss your individual situation and the options available to you.