What is salary sacrifice?
Many employers give staff the option to swap a part of their wage in return for a non-cash benefit. As a result of having a lower salary, employees pay less income tax and make lower National Insurance contributions. Likewise, employers save on National Insurance as this is linked to salary.
New rules are coming in on 6 April 2017 for Benefits in Kind (Biks) where they are provided by salary sacrifice.
If you provide benefits to your employees in exchange for salary sacrifice/salary exchange or have a flexible benefits package where your employee can choose a benefit or cash, or where you provide benefits but offer your employee a cash alternative then you will need to know about these changes.
Most benefits are affected by this change, but pension schemes, childcare costs, bike schemes, financial advice and ultra-low emission cars will be exempt for these changes.
If you are using salary sacrifice with your employees, you need to be aware of the new rules.
If you have any payroll queries, or would just like to discuss, call Lee Reynolds, Payroll Manager on 01788 539000.