PAYROLL INSIGHT
In June, Professional in Payroll, Pensions and Reward invited several industry luminaries to participate in a virtual roundtable articulating their views on the highly topical issue of optional remuneration arrangements (OpRA). Legislation came into effect from 6 April 2017 affecting employers’ salary sacrifice and flexible benefits arrangements. This is the concluding part of the roundtable, the first part of which was published online at http://bit.ly/2vPHHkX Phantoms of the OpRA – part 2
Phantom (noun): a ghost; a figment of the imagination; not real, illusory; denoting a financial arrangement or transaction which has been invented for fraudulent purposes ( Oxford English Dictionary ) Participants Susan Ball, partner, Employment Tax & Advisory Services, Crowe Clark Whitehill LLP Richmal Price, payroll advice team leader, Employment Advice Services Department, Peninsula Claire Treadwell, senior bureau manager, IRIS Software Group and Cascade Human Resources Samantha Mann MAAT, MCIPPdip, senior policy & research officer, CIPP Are you aware of employers changing or planning to change their employees’ benefits packages to reflect the optional remuneration rules from 6 April? Richmal: Many of our membership base have been amending their benefits packages due to the changes in the rules
from 6 April this year. Some have put the wheels in motion to change away from a salary sacrifice scheme, knowing that new OpRA rules for those already in a salary sacrifice scheme as of 6 April 2017 will kick in from 6 April 2018. Others are ‘holding fire’, waiting to see if any more changes are announced prior to April 2018 before making any decisions with regard to those already in salary sacrifices schemes. Samantha: We have examples of both extremes. In the early days of consultation before the outcome was widely known, the perception that salary sacrifice would end did lead many to consider closing their schemes. Since draft guidance was published and it became clear that there would be an element of transitional protection for arrangements in place (and not subject to change or renewal) as at 6 April 2017, has
allowed a brief opportunity to review that initial thought process. The new rules introduced through OpRA undoubtedly add to the administrative burden of processing benefits in kind either by P11D return or through payrolling; much will depend upon the resources available to the employer and their payroll and benefit specialists. However, there are sectors where it is commonplace to have attractive and varied reward packages and sacrifice and allowances play a large part of those schemes; we see no immediate indication that they will come to an end. Susan: Many employers are giving or have already given consideration to the new rules from 6 April 2017 and what changes may be needed to their current reward packages. The changes in some cases are merely to explain the impact on the benefit in kind value for tax purposes. Employees do still save Class 1 National Insurance contributions. The government has not eliminated the financial benefits of salary sacrifice schemes altogether. Ultra-low emission
Susan Ball, partner, Employment Tax & Advisory Services, Crowe Clark Whitehill LLP
vehicles are still tax efficient as are arrangements for childcare, pension
| Professional in Payroll, Pensions and Reward | October 2017 | Issue 34 26
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