Closing tax loopholes
Posted on Oct.05, 2016 by awaller in Latest News
HM Revenue & Customs is concerned about the extent to which employers are assisting their employees to reduce their liability to income tax and National Insurance contributions by offering benefits in kind in lieu of salary.
It is proposing that with effect from April 2017 certain such ‘salary sacrifices’ would be brought into charge to tax. Three schemes would be excluded and permitted to continue, namely:
- employer-sponsored childcare
- the provision of bicycles and biking safety equipment and
- both employer pension contributions and the £500 allowance for advice on financial planning for retirement which it is proposed that employers should make available to their employees.
These schemes are explained in the three following items.
Schemes which would fall foul of the new restrictions relate to private medical insurance, company cars, workplace parking, health screening and the provision of mobile phones, computers and TVs. Employers will be required to report such schemes to HMRC.
Aside from the loss of tax revenue caused by such schemes, the government is aware that they perpetuate an inequality in that the benefits are largely confined to higher-paid employees.
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