Salary sacrifice (optional remuneration arrangements)

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What is a salary sacrifice arrangement?

Following implementation of the Finance Act 2017 (FA 2017), since 6 April 2017, only salary sacrifice arrangements relating to pensions advice, employer-supported childcare, cycle to work and ultra-low emission cars have continued to benefit from beneficial tax and/or National Insurance contribution (NIC) arrangements. In addition to these, contributions to registered pension arrangements have also benefitted, however with effect from 6 April 2029 these will also be impacted, as only the first £2,000 per year of contributions through salary sacrifice will be exempt from NIC from that date (for more details, see Practice Note: Types of salary sacrifice — Pension contributions). Therefore, unless the salary sacrifice relates to one of these special cases (or relates to an otherwise tax-exempt benefit) swapping salary for benefits under a salary sacrifice scheme will, subject to transitional arrangements, face a taxable value of the higher of the amount of cash remuneration given up, and the taxable value under the benefit in kind rules.

The rules introduced by FA 2017 refer to ‘optional remuneration’ arrangements (OpRA). These are wider than the traditional salary sacrifice arrangements

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