Cash or car?

Since James Hunt’s article on salary sacrifice ‘Chaos around the corner’ (Taxation 13 October 2016) the autumn statement and recently published HMRC guidance have clarified the position. It should be noted that a consultation on the draft legislation will run until 1 February 2017 and the final details will be confirmed in 2017.

The proposed changes are significantly greater than was suggested at the start of the consultation and will affect many employers and their employees.

Change and no change

There will be no change to the tax and National Insurance contributions advantages of salary sacrifice arrangements for: pension saving into a registered scheme; employer provided pensions advice; employer-supported childcare; cycle-to-work schemes; and ultra low emission cars (ULEVs).

There will be changes for all contracts for benefits in kind involving salary sacrifice arrangements entered into on or after 6 April 2017. Those employees...