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Salary Exchange Changes

Rule Changes to Salary Exchange Schemes, Your Questions Answered.

In his Autumn Statement, Chancellor Philip Hammond announced the government’s intention to make changes to rules on the way that some salary exchange schemes are taxed. Salary exchange schemes (also known as salary sacrifice schemes) provide companies with a way to enhance staff remuneration and lifestyle, improve morale, and create a real workplace differential without impacting on payroll. With rising inflation set to put pressure on both business and household budgets, many employers will be keen to understand the new rules coming into effect on 6th April 2017. A consultation process is ongoing, and final details are still to be confirmed, but we already know much of the important information.

To help employers and employees understand the impact of the new rules, our short Q&A provides answers to some key questions:

Q Will the rule changes affect all existing schemes?

A No. It’s important to recognise that not all schemes will be affected by the new rules. A number of key schemes will remain, continuing to offer tax and NI savings for employees and reducing employers’ NIC payments for the foreseeable future. They are:

  • Childcare Vouchers
  • Cycle to Work
  • Holiday Exchange
  • Ultra-Low Emission Cars (75 co2 and below)
  • Pensions & Pensions Advice

Q Which existing schemes will be subject to the new rules?

Some salary exchange schemes will no longer attract employee tax savings and employers NIC if they’re taken up after 5th April 2017. They are:

  • Health Screening          
  • Parking at Work
  • Professional Fees & Subs
  • Save as you Learn
  • Mobiles & Home Tech.

Q What will happen to existing arrangements on schemes subject to the new rules?

A  All existing arrangements on schemes subject to the new rules which are entered into before 6th April 2017 will continue until 5th April 2018 – with the exception of car contracts which will continue until 5th April 2021 - with the full tax and N I savings maintained until these dates.

Q Can employees still register for affected schemes ahead of the deadline?

A Yes. Up until 5th April 2017, employees can still register onto any scheme and take full advantage of the employee tax and NI savings which will apply up to 5th April 2018. Employers NIC savings will also apply up to this date. Important note: Although employees must enter into an arrangement before the April 2017 deadline to qualify for savings, salary deductions do not have to start immediately, so long as a start date is pre-determined.

Q Will the affected schemes still offer any benefits once the new rules apply?

Yes, although affected schemes will no longer attract tax savings once the new rules are applied, salary exchange schemes will continue to offer many benefits to employees. In particular:

  • Savings on National Insurance
  • Ability to spread costs without having to pay any interest
  • Convenience of making regular, predictable payments
  • No up-front costs, credit, insurance or reference checks
  • Access to corporate discounts in some instances

Are You Operating a Gemelli Salary Exchange Scheme Which Will be Subject to the New Rules?

If you’re an employer and you are currently running a Gemelli salary exchange scheme which is going to be affected by the new rules, we’ll be contacting you soon to discuss the options open to you and your employees. If you are concerned the changes may adversely affect staff morale, we can look at the possibility of continuing to operate schemes in a different format, or we can advise you on our range of voluntary and company-paid employee benefits. In the meanwhile, make sure that you and your employees don’t miss out on tax and Employers NIC savings. Contact us now to register onto a scheme before the 5th April 2017 deadline. Call now on 01280 851113, or email us.

Supporting Medical Detection Dogs

Gemelli are delighted to be supporting Medical Detection Dogs as its chosen charity.

Medical Detection Dogs train dogs to help people with life threatening  health conditions giving their owners a better quality of life, confidence, greater independence and above all saving their lives on a daily basis.  You may also occasionally hear a bark in the office as Heather also supports them with dog fostering!

Find out more about this wonderful charity – www.medicaldetectiondogs.org.uk