Employment Tax

Flexible benefits schemes ― an overview

Produced by Tolley in association with Robert Woodward
  • 30 Jun 2022 10:40

The following Employment Tax guidance note Produced by Tolley in association with Robert Woodward provides comprehensive and up to date tax information covering:

  • Flexible benefits schemes ― an overview
  • An introduction to flex schemes
  • So how does Flex work?
  • Introducing and running a flex arrangement
  • Feasibility study
  • Strategy and design
  • Legal issues
  • Tax issues
  • Scheme launch and communication issues
  • Administration
  • More...

Flexible benefits schemes ― an overview

An introduction to flex schemes

A flexible benefits scheme allows an employee some degree of choice in how their remuneration package is structured. The terms ‘salary sacrifice scheme’ and ‘flex scheme’ are often interchangeable, because they usually refer to the same thing. The main difference, if there is one, is that ‘salary sacrifice’ may refer to a degree of employee choice given on a single employment benefit. A flex scheme on the other hand often applies choice to a number of different employment benefits at the same time, therefore the considerations on implementation are more numerous.

This document sets out the basics of how a flex scheme might work, alongside the usual steps involved when implementing a successful scheme. A number of additional guidance documents then provide further assistance on the various practical steps and considerations, as listed below:

DescriptionGuidance notes
Preliminary work around feasibility prior to implementing a flex schemeFeasibility study for a flexible benefits scheme
Employee car or company car, matters to considerOwn car v company car
Rules applicable for valuing benefits when employee has the choice between cash or a benefit in kind, including exceptions to the rulesOptional remuneration arrangements
What are the potential areas of salary sacrifice and the risk factors?Salary sacrifice arrangements ― overview
Interaction between salary sacrifice and national living or minimum wageSalary sacrifice and national minimum wage
When and how often may an employee change a salary sacrifice agreement?Changing the terms of a salary sacrifice agreement
Interaction between salary sacrifice

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