Salary Sacrifice and the New OpRAs: An Update

The introduction of the new Optional Remuneration Arrangements (OpRAs) regime has had a significant impact on salary sacrifice and flexible benefit arrangements.

April 2017 saw the introduction of the new OpRAs regime, with the aim of reducing the tax and NIC advantages of certain non-cash benefits. The rules can potentially affect any arrangement whereby an employee can choose between cash and a benefit, such as a company car.

Broadly, where the new regime applies, the taxable value is now the higher of the earnings foregone by the employee or the taxable value of the benefit under the benefit-in-kind rules. The rules affect any arrangements made or varied since 6 April 2017.

This does not apply to the following:

■ Employer provided pension savings and advice

■ Childcare vouchers

■ Workplace nurseries

■ Ultra-low emission company cars

■ Cycle-to-work schemes

■ …and some other benefits.

Following a transitional year, the rules now apply to all pre 6 April 2017 salary sacrifice contracts from 6 April 2018, with the exception of a few specific benefits, including:

■ Cars

■ Vans

■ Fuel

■ Living accommodation

■ School fees.

These benefits are protected from the rules until 6 April 2021, as long as they are not varied or renewed before then.

For further information on tax efficient remuneration packages, please contact us.