11 October 2016
In August 2016, HMRC launched a ‘Consultation on salary sacrifice for the provision of benefits in kind’. The indication is to bring in law changes from April 2017.
Salary sacrifice/exchange, flexible benefit schemes have all grown aggressively over the past few years as employer access to technology and systems and the introduction of new and more obscure schemes have become widely available. Jane Ellison MP (Financial Secretary to the Treasury) has stated that ‘this growth represents an increasing cost to the Exchequer and creates and uneven playing field…’
So what is a salary sacrifice and does it impact anything else? These are agreements between the employer and employee to change the employment contract – the employee takes a pay cut in exchange for non-cash Benefit in Kind (BiK). However, employees whose pay is close to National Living or Minimum Wage cannot participate else the employer could be committing a criminal offence by paying under the National Minimums allowed. ‘Those employees who are not able to participate… are at a disadvantage’. So some employees are able to ‘receive the BiK at a reduced cost at the expense of the Exchequer’, plus salary sacrifice can cause artificially increased entitlements to tax credits or Universal Credit.
The proposal limits BiK item tax and NICs advantages offered by employers through salary sacrifice to those being promoted by government: Pension Savings; pension advice; employer-supported childcare and cycle to work. BiKs offered on top of salary will not be affected, however, this is not the case where there is choice of cash or benefit such as for Company Car Schemes. Although such schemes are on top-of regular salary, HMRC currently consider the option of Cash as bringing the car scheme into challenge under these salary sacrifice proposals. So employers who do not have salary sacrifice schemes may also be impacted.
As no employee NICs are due on most BiKs, the proposals apply to income tax and employer NI (Class 1A).
But some caution – HMRC state that ‘references to salary sacrifice should also be referring to relevant flexible benefit arrangements in which the employee can exchange cash remuneration for one or more BiKs.
‘The government proposes to change tax legislation so that where a BiK is provided by such arrangements, ‘it will be chargeable to income tax and Class 1A employer NICs, even if it is normally exempt … at the greater of: the amount of salary sacrificed; and the cash equivalent set out in statute’. This removes the tax advantage from the employee and the NICs advantage from the employer.
Payroll Giving to charity remains, however, salary sacrifice employer charitable giving is captured as Class 1 NICs on both the employee and employer will be due. So schemes where an employee can give a day’s work for a charity donation from the employer lose their current NICs free status.
Many scheme lock employees in for a period of time and part of the consultation is to ask for views on what should happen?
Following implementation of the proposals (and any revisions), employers will be required to report BiKs provided through salary sacrifice to HMRC through the P11D/P11D (b) process or voluntary payrolling and the P11D (b) process for the payment of Class 1A.
Employer must take not and review their arrangements. Even though some may not be considered Salary Sacrifice at all (such as Car Allowance), other cash or benefit on top arrangements are captured by the proposals.
The UK prime Minister announced new lockdown restrictions in response to increasing Coronavirus cases. What do the new restrictions mean for payroll and HR professionals in the UK? Find out more in our blog.P. Simon Parsons - 2 November 2020
The government has announced the launch of policies and measures to protect jobs where businesses are facing lower demand over the winter months due to the Covid-19 pandemic. Learn all about the job Support Scheme and whether you are eligible.12 October 2020
It might have been costly to change payroll suppliers twenty years ago, but thanks to modern technology it doesn’t cost nearly as much as resource and time as you might think. Uncover the truth in our blog.14 September 2020
Every year UK businesses lose £12 billion from payroll fraud. In this blog we’ll explain the common types of payroll fraud and share tips on how to stop it from happening to your business.14 September 2020
Simon Parsons, Director of Compliance strategies, SD Worx UK, responds to the Government’s new advice regarding payrolling benefits in kind.9 September 2020
Simon Parsons, Director UK Compliance Strategies, SD Worx UK & Ireland, discusses the Government’s Kickstart scheme which aims to create thousands of jobs for young people across the UK.9 September 2020
HM Revenue and Customs (HMRC) has updated guidance in readiness for the commencement of the second part of the Coronavirus Job Retention Scheme (CJRS). Simon Parsons, Director of Payments, Benefits & Compliance Strategies at SD Worx UK, shares his interpretation of the changes and what this could mean for employers.P. Simon Parsons - 15 June 2020
Our resident payroll and legislation guru answers your questions about furlough and SSP.29 April 2020
We’ll help you make sense of the government’s advice on Statutory Sick Pay and taking care of your employees during COVID-19.24 March 2020
There have been many publications about the Good Work Plan over the past 18 months and it can be confusing to work through complex, legislative documentation to understand how you stay compliant. While the good work plan covers many topics, this blog aims to take you through one aspect of this, Holiday Pay, and asks the simple question – are you ready for the changes?29 October 2019
If you want to learn best practice in handling data in light of the General Data Protection Regulations (GDPR), you can do no better than to look at DuPont. Now part of science giant DowDuPont following a merger last year, data is part of the DNA of the organisation and it has a long history of embedding data protection into its culture.8 March 2018
Here are the top five lessons on implementing GDPR from the session with Gert Beeckmans, Chief Risk and Security Officer at SD Worx, and Frank Rudolf, Director of Payroll at PAREXEL from the SD Worx European Conference 2018, held in London on 6th February.2 March 2018
With just three months to go until the General Data Protection Regulation (GDPR) comes into force, the clock is ticking for HR and payroll managers to get the systems and processes in place to ensure compliance. The regulation, coming into effect on 25 May 2018, updates data rights for today’s networked world, and organisations ignore it at their peril.1 March 2018
Clark Hoy, Business Development Manager at SD Worx UK & Ireland shares his top tips for all the new dads and dads to be (D2B) regarding all things paternity!26 February 2018
Retention of the personal data is ‘lawful basis’ where it is necessary, for compliance with a legal obligation, for the exercise or defence of legal claims. For Payroll and HR reasons, employers must hold and retain personal information about their employees and former employees to meet these legal requirements.4 December 2017
GDPR is set to see the biggest shake-up in the way we handle data since the Data Protection Act of 1998. Over the last few years, the processing and control of data has seen many systematic changes. Updated legal obligations set out in the Regulation such as the ‘lawful basis’ of the processing of data is sure to see more changes to data handling.27 November 2017
Read Simon Parson's latest blog where he answers the frequently asked question: 'Do you know if HMRC are likely to want us to include more options for employees that may be transitioning or don’t identify themselves with either gender?'23 November 2017
Increasingly within global organisations we see that individuals have increasing international activity throughout a business’ empire with differing national fiscal obligations. Impact on employees and compliance with a variety of national fiscal government obligations brings into play significant complexities. Some will be available within Payroll Software or service, whereas others, a little more obscure, may require special handling. For UK Payroll, there are a variety of variants (to the normal) Pay As You Earn (PAYE) obligations.6 November 2017
The EU’s General Data Protection Regulation (GDPR) comes into effect on 25 May 2018. It applies to any organisation that processes the personal data of
EU citizens regardless of where they are situated. Brexit won’t let UK companies off the hook as the government has announced that the legislation
will be brought into UK law.
9 October 2017
In order to get to understand Alabaster, we recommend that you know a little about the case precedent behind it.2 October 2017
Our Head of Legal, Leon Daniel, has written some useful information on GDPR and what it might mean for your organisation. This is the second of a series of articles on the steps we are taking at SD Worx to ensure GDPR compliance.14 August 2017
Our Head of Legal, Leon Daniel, has written some useful information on General Data Protection Regulation (GDPR) and what it might mean for your organisation. This is the first of a series of articles on the new Regulation and will cover the steps we are taking at SD Worx to ensure GDPR compliance.7 August 2017
Part two of our blog, our Commercial Director John Cusack and Business Development Manager Steve Knapman, built upon the information outlined by Mercer in part 1 – and discuss how SD Worx’s analysis tools can provide you with in-depth statistics on the gender pay gap. Read more on some of the useful points that we took away from the webinar...10 July 2017
Minimum pay is governed by employment law, and breach is criminal; HM Revenue & Customs are charged with policing its application based on a number of significant factors and structures. In this blog, our Director of Payment, Benefits & Compliance Strategies, Simon Parsons, discusses critical touch points for compliance and recent payroll error examples regarding this legal requirment.3 July 2017
The gender pay gap has been a hot topic for years, dominating discussion in the media and in boardrooms. Seemingly refusing to close, the gap stood at 9.4% in 2016, down from 17.4% in 1997. While the UK is getting nearer and nearer to gender parity in pay, figures suggest it still has a long way to go...19 June 2017
2017 is going to be both interesting & challenging. With Brexit and changing government leadership much is to be done and quickly. Now is the time for the business to come together and plan for change...2 March 2017
Often once the deal is done you can’t see the lawyers for dust, so if you receive notice from a supplier or customer that they have been acquired, or if you have been acquired yourself, what do you need to do to keep your current contracts in order?3 October 2016
The way the government funds apprenticeships in England is changing. The 6th April 2017 sees the introduction of a new employment tax on United Kingdom employers. Scotland Wales and Northern Ireland, each having their share of the levy, will have to decide how apprenticeship spending will take place. In this blog I cover some key points that employers should be considering in order to prepare for the upcoming changes...5 September 2016
As a union, the UK has voted to leave the European Union with some Scottish politicians hinting of a further independence referendum, and some in Northern Ireland wanting a joint Irish nation! At the same time, Job Centre Plus has run out of National Insurance numbers and in June 2016, decided in to start issuing NINOs with prefix ‘KC’ - but there is an issue with this...15 August 2016
With the result of the UK referendum to leave the European Union and indication by Scotland's first minister to run a further Devolution referendum, Simon Parsons considers the potential implications for the next few years for Scotland and Payroll services...8 August 2016
So the nation has chosen to progress leaving the EU with a popular vote of 52%. So what's changed, apart from volatility in currency and stock markets? And what major action do we see impacting payroll?26 July 2016
The National Living Wage (NLW) became compulsory for employees aged 25 and above, at a new minimum rate... Have you considered the implications and reviewed your maternity leave payments and made top-ups of SMP?27 June 2016
April 2016 saw some of the most significant legal changes to impact payroll operations and software. I would venture that this year’s new changes have been some of the most impactful yet, more so than the introduction of Real Time Information (RTI). New requirements for Scotland including the Scottish Rate of Income Tax and changes to Earnings and Maintenance Arrestments. A revolution in national insurance with the removal of Contracting out and Under 25 Apprentice NICs being introduced. The list can go on.13 June 2016
Following the judgement of the Employment Appeal Tribunal (9th March 2016), the question of salary sacrifice and maternity rights has been thrown into question! Was HMRC errant in providing guidance? Are employers now off the hook with provision of non-cash benefits in kind during maternity?16 May 2016
In the 2015 Queens speech, the Government set out to create 3 million new apprenticeships by 2020. As part of the Enterprise Bill, apprenticeships would gain the same legal treatment of degrees. ‘The Richard Review’ brings new standards being developed by ‘trailblazers’ and new funding trialled giving employers greater control over spend on training delivery.11 April 2016
We thought 2013 was busy with the introduction of Real Time Information, but looking back it now seems a doddle! 2016 is proving to be one of the most substantial change years ever for payroll, software and service providers and especially payroll managers. Never before have I seen such a wide, heavy plethora of change. Now seems a good time to start the preparations in earnest and put the brain in gear...25 January 2016