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COVID review of salary sacrifice arrangements

Source: HM Revenue & Customs | | 07/10/2020

The tax and NIC advantages of certain benefits provided as part of a salary sacrifice arrangement were removed from 6 April 2017. The change effectively removed the Income Tax and employer NIC advantages of certain benefits provided as part of salary sacrifice arrangements such as mobile phones and workplace parking.

Where these benefit valuation rules apply, the value of the benefit for tax and NIC purposes is the higher of the amount of cash pay given up and the taxable value of the benefit in kind. This is known as optional remuneration arrangements (OpRA).

However, under a transitional plan the old salary sacrifice rules continue until 6 April 2021 for:

  • the provision of a car with emissions of more than 75g CO2/km
  • provided living accommodation
  • the payment of school fees

The new rules will not apply to these types of benefits until 6 April 2021, unless employees vary or renew their arrangements.

An arrangement is not regarded as being varied if the variation of the arrangement is only directly in connection with coronavirus.



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