TOLLEY_ICON4_SIGNIN Contact us
Home/ Tolley Tax Guidance/ Employment Tax / Remuneration planning
Employment Tax

Optional remuneration arrangements

Produced by Tolley in association with Robert Woodward
  • 01 Apr 2022 14:42

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

  • Optional remuneration arrangements
  • Overview
  • Benefit value
  • Exemptions
  • Transitional provisions
  • Factors to consider

Optional remuneration arrangements

Overview

For more information and guidance from HMRC in this area in relation to coronavirus, see the Optional remuneration arrangements and coronavirus (COVID-19) guidance note.

Effective from 6 April 2017, legislation on optional remuneration arrangements (OpRA) added a further consideration to the taxation of benefits provided through salary sacrifice. This legislation adds to the removal of tax advantages for canteens, home computers and travel payments provided through salary sacrifice which were already in place before the OpRA rules.

The most comprehensive HMRC guidance in relation to OpRA is provided at EIM44000 onwards.

The conditions required in order to implement an effective salary sacrifice agreement are set out in the Salary sacrifice arrangements ― overview guidance note, and are unaffected by the OpRA rules. However, the OpRA rules may in turn affect the tax efficiency of certain salary sacrifice agreements.

The OpRA rules apply to two types of situation:

  1. •

    sacrificing current salary in favour of a benefit (‘traditional’ salary sacrifice) ― ‘Type A arrangements’

  2. •

    foregoing future salary / earnings (this is harder to ascertain) ― ‘Type B arrangements’

Whilst the first is generally understood, the ‘Type B’ question, of to what extent the employee “agrees to be provided with a benefit” as an alternative to future cash, can be harder to define. For example, if an employee can opt for a company car or cash, and takes a car on a three-year lease, Example 3 of EIM44020 indicates that the OpRA rules will apply for that three-year period. But Example 1 of EIM44020

Access this article and thousands of others like it
free for 7 days with a trial of TolleyGuidance.

TAKE A FREE TRIAL

There's no margin for error. Think Tax.
Think Tolley.

TolleyGuidance gives you direct access to critical, comprehensive and up-to-date tax information and expertise you can rely on.

TAKE A FREE TRIAL

Popular Articles

Owner-Managed Businesses

Legal and professional fees

Statutory references to ITTOIA 2005 relate to unincorporated businesses and CTA 2009 relate to companies unless otherwise stated.Legal and other professional fees can represent substantial costs to a business. A detailed analysis is often required for the purpose of preparing tax computations as

11 Apr 2022 10:50 | Produced by Tolley Read more Read more
Corporation Tax

Audit of tax

Tax professionals will often be asked to provide input into the financial statement work undertaken by audit professionals. This guidance note is intended to give an overview of some of the key issues when undertaking audit work.This note is an introduction only and is written on the assumption that

08 Feb 2022 09:30 | Produced by Tolley in association with Nick Watson Read more Read more
Corporation Tax

Controlled foreign companies (CFCs)

IntroductionThe CFC rules as outlined in this note apply to accounting periods beginning on or after 1 January 2013, the date upon which significant changes made by Finance Act 2012 became effective.From this date, the CFC rules also apply to foreign branches in respect of which an exemption

16 May 2022 13:22 | Produced by Tolley Read more Read more