For those of you who are interested in this level of detail, the technical consultation on the measures for the Finance Bill 2017 were published on 6 December 2016.
- Overview of the legislation in draft
- Draft provisions for the Finance Bill 2017
- Draft explanatory notes for the Finance Bill 2017
One of the major concerns following the autumn statement, was the impact of the intention to clamp down on salary sacrifice arrangements from 6 April 2017. Here’s an extract from the explanatory notes on this topic:
33. The use of salary sacrifice arrangements in the provision of benefits in kind allows some employees to pay less income tax and NICs in comparison to what they would have paid if remunerated entirely in cash. Employers also achieve a cash saving. The cost of the tax and NICs represents an Exchequer cost which is borne by the majority of taxpayers.
34.To address this unfairness, the government intends to limit the income tax and NICs advantages available by imposing a notional cost on taxable benefits based on the value of the amount of salary given up, if this is greater than the charge that would otherwise be due under the legislation. For those benefits which are subject to either a full or a limited exemption, the exemption is disapplied if the benefit is provided in conjunction with a salary sacrifice arrangement.
35.For certain key policy areas such as pensions provision, childcare, ultra-low emission cars and the provision of cycles and cyclists’ safety equipment, which the government wishes to continue supporting but which could fail without the use of salary sacrifice arrangements, the government has agreed to continue allowing the use of salary sacrifice arrangements without limiting the effect on tax and NICs savings.
36.The new legislation will have effect on new or revised contractual arrangements involving salary sacrifice which take place on or after 6 April 2017. For agreements in place before that date which continue to apply without change, the new rules will take effect from 6 April 2018 for all benefits except cars with CO2 emissions of 76 grams per kilometre and above, employer-provided living accommodation, and school fees. The old rules will continue to apply for these three types of benefit until 6 April 2021.
Section 34, the imposition of a notional cost on taxable benefits, could be interesting.
The full pack of documents can be downloaded or viewed at https://www.gov.uk/government/publications/finance-bill-2017-draft-legislation-overview-documents