Lovewell’s logic: Is the abolition of salary sacrifice actually an opportunity?

Debbie Lovewell-Tuck

This week’s Autumn Statement brought months of speculation to an end when Chancellor Philip Hammond announced that the tax and NI advantages on benefits offered via salary sacrifice will be abolished from April next year.

Contrary to many reports in the national press over the last week or so, this was hardly a surprise or something that the government has been planning by stealth. Prior to the Chancellor’s announcement, it was almost a given that salary sacrifice as we know it would be abolished (with the exception of a handful of schemes that the government had previously announced it would preserve). However, what we were waiting for were details on whether it would abolish the tax and NI advantages on all other benefits offered via salary sacrifice or whether any additional ones would be added to the list of exemptions.

In the end, as we now know, the ruling will apply to all benefits offered via salary sacrifice except for pensions and pensions advice, childcare, bikes-for-work schemes, and ultra-low emission vehicles.

But, is this necessarily the disaster that many of the press releases I’ve received in the last 24 hours have heralded it to be?

While there is no question about the fact that the move has left a number of benefits providers questioning what the future now holds for their business, we have also spoken to some that are very much viewing this as an opportunity to innovate. Their view is that, while the situation may not be ideal, it does provide an impetus for change, which, ultimately, will only be a good thing.

I wholeheartedly agree. After all, the government’s move isn’t removing the benefits themselves. Employers will still be able to offer these to their staff, albeit in a slightly different guise or with an alternative funding mechanism behind them. Yes, it may make them slightly more complex to offer and it may take some time for benefits providers and employers to work out exactly what schemes will look like after April 2017, but ultimately employees will still value the end benefit, which surely is the point?

I think we’re certainly set to see some interesting debates and developments over the coming months as providers regroup and adjust to the new order of things.

Debbie Lovewell-Tuck
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