The latest HMRC consultation on salary sacrifice arrangements threatens to substantially change and one might argue diminish the UK benefits industry. At present, the NI relief that is available on properly administered salary sacrifice schemes has made benefits provision extremely attractive to employers by saving them 13.8% of the cost.
The proposed restriction of salary sacrifice to:
- employer pension contributions
- pension advice
- childcare voucher
- workplace nurseries
- cycle and safety equipment
may well deliver the coup de grace to many salary sacrifice schemes. A whole industry will need to justify its existence and the value of the benefits it offers without the cushion of the employer saving.
Practitioners may recall that Profit Related Pay (PRP) almost disappeared once the tax relief was phased out in the late 1990s. Will the same thing happen to many salary sacrifice schemes?
