Consultation on limiting the use of Salary Sacrifice schemes

Print publication


In August 2016, the Government launched a consultation into the use of salary sacrifice schemes. It comes in response to an evidence gathering exercise by HMRC which found that the use of salary sacrifice schemes is increasing.  Such schemes present an attractive opportunity for both employers and employees to limit exposure to income tax and employer NICs.

The areas under review include salary sacrifice schemes relating to private medical insurance and screening, cars, mobile phones and other white goods. The consultation makes it clear that more traditional salary sacrifice schemes (such as those in respect of employer pension contributions, pension advice, employer supported childcare, workplace nurseries, cycle to work schemes, flexible working and additional holiday and payroll giving) are not affected because the Government wishes to encourage such schemes.

The proposal is that the changes will be implemented as part of the Finance Bill 2017. We are aware that some employers have put proposed salary sacrifice schemes on hold pending the outcome of this consultation so we will be watching with interest and will update you further once more is known.