Under these arrangements an employer or a third party sells a car to an employee, often via a loan with no repayment terms and negligible interest, then buys it back after a short period. These arrangements mean those benefiting don’t pay company car tax, which other employees pay, and so this measure will seek to level the playing field. Arrangements existing prior to commencement will continue without a change in treatment until the earlier of the arrangement being varied, renewed, or 6 April 2032. There will also be an exemption from the benefit in kind rules for vehicles provided on arm’s length terms within the motor industry. The government has confirmed its intention to delay the operative date to 6 April 2030. Changes to salary sacrifice for pensions from April 2029 The government is changing how salary sacrifice for pension contributions works. Salary sacrifice is when you agree to reduce your gross salary or sacrifice a bonus and, in return, your employer pays the same amount into your pension. From April 2029, only the first £2,000 of employee pension contributions through salary sacrifice each year will be exempt from NICs. Contributions through salary sacrifice, like all pension contributions, will still be exempt from Income Tax (subject to the usual limits).
Employers and employees can still make contributions above £2,000 through salary sacrifice arrangements. However, employee contributions above this amount will be subject to employer and employee NICs like other employee workplace pension contributions. Employers will need to report the total amount sacrificed through their existing payroll. All employer pension contributions will continue to be free of NICs. Employees, as well as employers, will pay NICs on the amount above £2,000 for employee contributions through salary sacrifice. Employees who choose to salary sacrifice to receive Tax Free Childcare or Child Benefit can keep doing so. Expanding workplace benefits relief This measure will introduce new legislative exemptions for the reimbursement of eye tests, flu vaccines and home working equipment. Under current law, the exemption only applies where the employer provides the benefit directly. This change will ensure that reimbursements are treated in the same way.
This will have effect on or after 6 April 2026.
Removal of tax relief on non- reimbursed homeworking expenses This measure will remove the tax relief available to employees who have incurred additional household costs if they are required to work from home. These costs include increased household utility costs and business telephone calls. It will only apply to those employees who have not had these costs reimbursed by their employer. This will not impact the existing ability for employers that reimburse employees for costs relating to homeworking where eligible without deducting Income Tax and NICs.
This will take effect from 6 April 2026.
Employment
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