The following Employment Tax guidance note Produced by Tolley in association with Robert Woodward provides comprehensive and up to date tax information covering:
To consider setting up a flexible benefits scheme (see the Flexible benefits schemes ― an overview guidance note), it is important that employers are both aware of the consequences of the scheme and have checked that the relevant systems are in place.
Many employers simply consider flexible benefits schemes to be a straightforward method for delivering employer’s National Insurance savings through salary sacrifice (see the Salary sacrifice arrangements ― overview guidance note) but the reality is that in most cases, full prior consideration should be given to the consequences of the scheme. The most appropriate method is to undertake a feasibility study.
A flexible benefits scheme can cover benefits provided by salary sacrifice or benefits made available to employees to purchase from their net pay by taking advantage of their employer’s purchasing power (known as ‘voluntary benefits’) or a combination of the two. Consideration must be given to the basis on which the benefits will be provided and therefore the tax / NIC consequences of either approach.
Voluntary benefits are generally those where salary sacrifice is not necessarily the most appropriate, eg benefits to which employees do not wish to be tied in for a minimum period. There are few tax / NIC considerations applicable and as long as the employer requires the employee to make good (ie repay) the tax cost to their employer of providing the benefit, there is no tax or NIC liability.
Clearly, the first point to consider is which benefits to include in the scheme. The tax / NIC treatment of employee benefits is covered elsewhere (see the Optional remuneration arrangements guidance note) but it is important to consider that potentially any benefit can be provided via a flexible or voluntary benefits arrangement.
The extent of savings to be made and the attractiveness of any scheme will depend on the benefits provided (and their tax / NIC treatment) but equally, the greater the number of benefits provided then the
**Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason.
Access this article and thousands of others like it free for 7 days with a trial of TolleyGuidance.
Read full article
Already a subscriber? Login
‘Hold-over’ relief allows for the deferral of a gain that would otherwise arise in relation to a disposal. No capital gains tax (CGT) is due in respect of the disposal, but the base cost of the asset for the transferee for the purpose of a future disposal is reduced by an amount equal to the gain
IntroductionUK tax must be withheld on UK payments including:•interest•royalties•rental incomeWithholding tax may be reduced under double tax treaties (DTT) or European directives, both of which may be subject to making a formal claim.This guidance note outlines the rules for UK withholding tax, and
This guidance note explains the general rules surrounding the availability of indexation allowance on the disposal of company assets and provides information on the rebasing rules for assets held on 31 March 1982. For an overview of the general position regarding company disposals, please refer to
Class 1 and Class 1AClass 1 and Class 1A are the categories of NIC that can be charged on expenses reimbursed and benefits provided to employees. These classes are mutually exclusive. A benefit cannot be subject to both Class 1 and Class 1A NIC. Three requirements must be met before Class 1A NIC is
To view our latest tax guidance content, sign in to Tolley Guidance or register for a free trial.