Key steps in preparing for the new world of salary sacrifice
To help you with your journey into this new world, I’ve mapped out some key steps to take under the categories of Planning and Communication. I’d suggest beginning them as soon as possible, for as summarised at the end of this blog, the changes are going to be upon us before we know it.
Planning
- Pull together data on ALL of your salary sacrifice arrangements, both ones which are remaining and those that are closing. This will help you understand and assess exactly how your employees and your company have been using and benefiting from them.
- Consider the emotional and financial impact of those that will be closing so you can consider the impact to both employees and the company. Will the company be losing minimal or significant tax savings? Where is the saving going (e.g. is it being re-invested in other programmes being used elsewhere in the business)? Will a small or large number of employees be impacted? Pull together this data and answer these questions so that you have all the key information to be able to quickly move to the next step.
- Map out potential solutions to help you determine how you will handle these changes. Will you remove the benefit all together, continue as a benefit without the salary sacrifice arrangement, look for a product which offers the same benefit but without a salary sacrifice arrangement, etc? Consider the implications of costs and values both to the company and your employees. This will help you be prepared and armed with solutions to discuss and present to your company’s leadership team.
- Develop a change management plan to help you address and manage the change with your employees. Don’t underestimate the impact of these changes to your employees, accept that many will be disappointed, angry and many other emotions, and create a robust approach and plan to handle this. By doing this you will be prepared to support your employees as they progress throughout the change curve, working towards getting them to accept the change and move onto the solutions which you’ll be presenting to them.
Communication
- Communicate with your employees, letting them know about the change, the timing of the change, and next steps you’ll take during this period of change. Keep in mind that as with any communication, it’s important that it’s done in a timely and honest way if you want to achieve the desired results.
- Communicate with your leadership team, again letting them know which are being removed and the timing of the change, as well as information which will help them understand the impact (e.g. how many employees are in each scheme, tax savings for the company, average or range of savings by employees). In addition, share with them your initial thoughts on next steps.
- Communicate with your provider(s), getting initial information on how you will partner with them during this period of change.
Hearing about new changes can always set people on edge, but with the right preparation for you and your staff, you can breathe a little easier.
What are the changes?
All salary sacrifice schemes will be removed with the exception of the following four:
1. Cycle-to-work
2. Pensions constributions and pensions advice
3. Ultra-low emission cars
4. Childcare Vouchers. (Please note that the Government are still planning to replace Childcare Vouchers with the new Tax Free Scheme (TFC). TFC is planned to be rolled out in early 2017).
When will the change happen?
Schemes will be removed from April 2017, meaning you cannot put in place any new schemes after this date.
All schemes in place by April 2017 will be protected until April 2018, or those which the government has called ‘long-term arrangements’, which are those for cars, accommodation or school fees, will be protected until April 2021. This means that employees in these schemes by April 2017 will be allowed to stay in them until April 2018/April 2021 depending on the scheme.
View proposed legislation here
Debra Corey is group reward director at Reward Gateway.
This article was provided by Reward Gateway.
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