The new rules do not apply to pension contributions, childcare vouchers, workplace nurseries, directly employer contracted childcare, cycle to work or cars with CO2 emissions of 75g / km or less.
Where a BiK is provided as part of OpRA, the taxable value is now the higher of the taxable value of the BiK under the normal rules or the amount of salary/cash foregone. This is the value you use for calculating the income tax, Class 1 or Class 1A NICs, where liable, in respect of the BiK. Where a BiK provided through OpRA would otherwise be covered by an exemption, that exemption no longer applies. The value to be compared with the amount foregone in determining the taxable amount is nil. The taxable amount and amount liable for NICs, therefore, is the amount foregone.
Employers are strongly advised to refer to the new legislation and the Technical Guidance in the Employment Income Manual (EIM) and Booklet 480 .
Also see recent ‘ Guidance on Optional Remuneration Arrangements and Voluntary Payrolling ’ shared by HMRC’s Software Developers Support Team (SDST).
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Updated 480: Expenses and benefits - a tax guide 13 September 2017
The 480 has at last been updated to included guidance on optional remuneration arrangements, which were introduced in April 2017.
480: Expenses and benefits - a tax guide
Optional Remuneration Arrangements (OpRAs) are where benefits are provided through arrangements in which the employee gives up the right to an amount of earnings in return for a benefit which include flexible benefit packages with a cash option, cash allowances and salary sacrifice. New rules have been introduced from 6 April 2017 which mean the income tax and employer National Insurance Contributions (NICs) advantages (and employee NICs advantages where a charge exists), are largely withdrawn. This means that any arrangements entered into since 6 April 2017, or arrangements which have been varied or renewed, are now under the new Benefit in Kind (BiK) rules of Finance Act 2017.
The new rules do not however, affect arrangements in respect of pensions, childcare vouchers, workplace nurseries, directly contracted childcare, Cycle to Work, or cars with emissions of 75g CO2/km or less.
Technical guidance (including a full list of BiKs not affected) can be found in the Employment Income Manual .
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Class 1A National Insurance contributions on benefits in kind (CWG5) 22 September 2017
The CWG5 has been updated to reflect the optional remuneration arrangements that were introduced in April 2017.
The CWG5 guide provides information for employers who provide benefits to be reported on form P11D or substitute form or to employees of another employer. The guide tells employers what they need to know and do about Class 1A National Insurance contributions (NICs); it explains when Class 1A NICs are due and how they are worked out, reported and paid.
There is a new paragraph in Section 9 of Part 3 about how to calculate Class 1A NICs and a new paragraph about optional remuneration arrangements added in Part 5.
Class 1A National Insurance contributions on benefits in kind (CWG5)
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The Chartered Institute of Payroll Professionals
Policy News Journal
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