Wednesday 28th June 2017

New rules for salary sacrifice

If you’re thinking of offering your employees any benefits, it’s worth bearing in mind new rules on how those benefits are taxed.

In short, if you offer an employee the choice between cash or a benefit in kind (also known as “salary sacrifice”), they will be taxed on whichever of the 2 results in higher tax.

However, if you don’t offer a choice, and the benefit is provided to the employee as part of their employment contract, then the normal taxation of benefit rules apply.

Some benefits, such as a mobile phone, are normally exempt from tax and national insurance. Under the new scheme, they will become subject to tax and NI when you offer a choice, from 6 April 2017.

What you need to do

Don’t offer your employees a choice!

If you want to provide benefits in kind, you will need to decide what the most attractive combination of salary and benefits is for the employee/potential employee. Any benefits in kind included in their employment contract will be subject to the normal rules, even if you as the employer has decided to reduce the salary and increase the benefits in kind.

For any employees already in a salary sacrifice contract, the new rules will come in to force from 6 April 2018. You may wish to let them know about the changes and review their employment contract.

What you don’t need to do

You don’t need to worry about the following categories, which are exempt from the new rules:
• childcare vouchers/workplace nurseries
• pension contributions
• Cycle to Work scheme bicycles and helmets


May deadline dates for HMRC and Companies House

 If you are involved in the running of a Small Business you should take note of these key VAT, PAYE, Income Tax, National Insurance, Corporation Tax and Companies House dates for May


Give yourself a gift and save tax

 A company can give gifts up to £50 in value to its directors and secretary, without creating taxable benefits. In other words, you can receive a gift from your company and reduce your corporation tax bill.


How paying rent for your home office can save you tax

 This is a great tax tip on how to take funds out of your company with little or no tax to pay