In Budget 2016, the government announced that it would work together to limit the benefits of pay victims` plans. The consultation took place from August 10, 2016 to October 19, 2016. They must report the revised taxable value, i.e. the higher amount of the biK or the salary or cash waiver on the P11D form. In-kind benefits that attract the tax benefits and benefits of NICs when they are offered under a wage victim plan are now limited following the introduction of new rules in April 2017. Subject to exceptions, in-kind benefits (taxable or exempt) granted by wage victims are charged to the employer`s income tax and NIC on the highest amount of the wage sacrificed and the statutory equivalent of cash (if applicable). If the usual taxable value of the in-kind benefit is greater than the amount of the allowance, it is normally subject to Class 1A taxes and niCs. But with child care vouchers, you`d now have $1,406 usd -243 USD – a total of $1,649. An employer is not required to inform HMRC that a wage sacrifice scheme has been put in place. HMRC will not rule on a pay-as-you-go scheme before implementing it, but they will confirm, upon request, the correct tax treatment of the agreement as soon as it is put in place.
HMRC`s “Employer Compensation Victims” guidelines were updated on the government`s website to highlight the terms of changes to voluntary compensation agreements, which came into effect in April. The impact of a plan on income tax and national insurance premiums depends on the non-factual benefits the worker receives. If your employee wants to opt for a salary sacrifice agreement, you must change your contract with each change. Your employee`s contract must be clear about what his cash and in-kind claims are at a given time. An employee may also sacrifice future cash compensation as a salary, for example. B a unique bonus. In last November`s fall statement, the government announced that it was changing the rules governing wage victims` plans, which have become increasingly popular in recent years. There will be no change in tax and DES benefits for wage victims: retirement savings in a registered pension plan, pension counselling services offered by employers, childcare provided by employers, work bike systems or ultra-low-emission cars (ULEVs). In addition, those who have already entered into contracts for biKs with salary victims will be protected for the duration of this contract, subject to the final “backstop” dates. Employers who make BK available to their employees through wage victims or who offer a cash alternative to biK. The amendments to the section called into question the change in the terms of a compensation plan.
One of the most common uses for salary victims is pension contributions. Other common types of inseparable benefits are work cycle systems and child vouchers (although these are being implemented). Wage victims affect the worker`s employment conditions and are governed by labour law, not tax or pension law. Some benefits are also offered after April 2017, without pay and NI, thanks to salary victim schemes. Wage victims mean that the worker and the employer pay less social security contributions. Employers may decide to maximize the amount of pension contributions by adding the savings they receive from lower employer contributions from national health insurance to the total amount of pension contributions they make. This applies only to specific agreements with an employee, not your general wage sacrifice policy. This is the case: if you are already receiving tax credits to help with child care expenses, you`d probably be better off choosing not to opt for wage victims.