Budget 2016: Benefits in Kind update

A consultation has been announced to look at limiting the benefits of salary sacrifice arrangements, as it is perceived that the system is increasingly subject to abuse. The announcement in the Budget Documents draws a clear line around those benefits that the Treasury regards as “legitimate”, highlighting pensions, childcare, health-related benefits (Cycle to Work is mentioned explicitly). The implication is clearly that other schemes, like the various salary sacrifice arrangements around car-leasing, are in the Chancellor’s firing line.

In addition to the changes to the voluntary payrolling framework and the restriction of “fair bargain” that are discussed in other articles, the Treasury has also announced consultations on simplifying the PAYE Settlement Arrangement process and on aligning the dates for Benefits in Kind to be “made good” by an employee.

The previously announced measure to exempt trivial Benefits in Kind from tax has been confirmed and will come into effect from 6 April 2016.

The Chancellor has also announced that, following the consultation on travel and subsistence rules, no changes will be made to the existing rules for the present, as they are well understood by business, which would not welcome the upheaval associated with a wholesale revision of the rules.