From April 2017, most salary sacrifice schemes will be subject to the same tax as cash income.
In salary sacrifice schemes, employee’s exchange some of their salary for a non-cash benefit in kind (such as a mobile phone). Both the employer and employee make a tax saving because the benefit is taxed less than a salary or not taxed at all.
This will affect types of salary sacrifice schemes differently:
- pensions, pensions advice, childcare, Cycle to Work and ultra-low emission cars will be exempt
- all arrangements in place before April 2017 will be protected for up to a year, and arrangements in place before April 2017 for cars, accommodation and school fees will be protected for up to 4 years
For more information, please refer to: