REBA New Year Lectures: Employers fear removal of salary sacrifice

Last July’s Budget documents stated that salary sacrifice schemes are growing in popularity, increasing their cost to the taxpayer.

However, Stephen Gambles, head of performance and reward at Royal London, said that any moves to reduce the availability of salary sacrifice schemes would lead to employee confusion and detriment and a concern regarding “how much we are going to be able to do for our employees”.

“As employers we are becoming proxy administrators for the government, and they are coming back for more and more,” he told a panel discussion at the event.

Shaun Healy, principal at BDO, said that there is confusion at HM Treasury regarding flexible benefits and salary sacrifice and a belief that a big saving can be made by removing tax incentives.

“Flexible benefits and the use of salary sacrifice is just part of business now,” he said. “And everybody in this room has a role to play in educating anyone they know at HM Treasury that salary sacrifice schemes are not about tax and national insurance contributions avoidance.”

Simon Darby, account director at Westminster Advisers, said that salary sacrifice has been used very constructively by government to meet broader objectives, including childcare vouchers and cycle to work schemes.

But he added: “There is a long trend towards scrutiny and rigour and given the bind that HM Treasury finds itself in [cutting the deficit], clearly people are being told to examine salary sacrifice schemes.”

Jamie Jenkins, head of pensions strategy, Standard Life, said he expected the most the Chancellor would announce at the next Budget on 12 March would be to target employee NICs relief on pensions contributions.

“I’ve be very surprised if George Osborne goes for a mass removal of salary sacrifice schemes, except for pensions,” he added.

Slides of REBA New Year Lectures 2016 presentations can be found here