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Salary Sacrifices in Hammond’s Autumn Statement will Affect Welsh Businesses

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  • Surprise assault on salary sacrifice benefits may wrong foot employers and their staff
  • A select few of these employee benefits retain tax advantages
  • How should Welsh employers respond?

Chancellors like to spring one or two surprises in their Budgets and Autumn Statements. Phillip Hammond was no exception as he delivered his first major set-piece announcements.

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Among the most eyebrow-raising were salary sacrifice arrangements. Caryl Thomas from The HR Dept Cardiff West details the main changes and gives some advice to local employers.

“The chancellor announced that from April 2017, employees would no longer have the facility to give up some of their pre-tax salary for employee benefits in kind. These arrangements had tax advantages for employees and employers which will now cease.”

“There were a few notable exceptions: pensions, childcare vouchers, ultra-low emission company cars and cycle-to-work schemes. One or two other schemes are being phased out over a longer timeframe.”

Aside from the extra tax revenue, one of the cited motivations was that this was an unfair tax break, as it was larger companies that tended to offer these. However, advances in technology were making the benefits increasingly accessible to smaller businesses too. So what should employers be doing?

Caryl continues:

Employers may have received queries from staff already. The first thing to do is reassure them about what’s staying; after all, in many cases, pensions and childcare are likely to be among the most valued benefits. Next, it would be wise to undertake a review of what salary sacrifice benefits you offer and how the company tax bill will be affected.

Once you’re fully aware of your situation, you can make informed decisions about any changes required and then communicate these to staff. You need to be particularly careful if any of the benefits you offer are contractual. In that case you’ll need to consult with staff and negotiate a way forward.”

Human Resources is full of surprises. Caryl Thomas from The HR Dept Cardiff West is available to advise local businesses on them – whether they are sprung by an employee or a chancellor!