1 © 2016 haysmacintyre | Autumn Statement: impact on independent schools

Salary sacrifice

Following the recent consultation undertaken by the Government the tax and National Insurance advantages obtained via salary sacrifice will be removed from April 2017 with the exception of:

• Pension arrangements (including advice);• Childcare;• Cycle to Work; and• Ultra-low emission cars.

The change in the rules will mean that employees who exchange salary for benefits will pay the same amount of tax as employees who receive cash earnings and decide to obtain a similar benefit out of their taxed income.

Grand-fathering rulesThere will be transitional, or “grand-fathering” provisions where employees have entered into a salary sacrifice arrangement before 5 April 2017. The favourable treatment will be retained until 5 April 2018.

Where an employee has entered into a salary sacrifice arrangement for the provision of school fees, living accommodation or cars, grand-fathering provisions will protect the tax and National Insurance favourable treatment until April 2021.

haysmacintyre commentWhilst it is disappointing to see the end of salary sacrifice for school fees the Government has listened to representations made to them (including our own) through the consultation and have provided a more generous “grand-fathering” period compared with other benefits.

Schools can continue to provide salary sacrifice for school fees until April 2021 (provided the scheme is set up by April 2017), allowing all concerned the time to consider reviewing their salary and benefit arrangements.

However, we will need to consider the draft legislation once this is published on 5 December 2016.

Autumn Statement: impact on independent schoolsIn the first and last Autumn Statement presented by Philip Hammond, the Chancellor of the Exchequer, made two announcements which will be of interest to independent schools.

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2© 2016 haysmacintyre | Autumn Statement: impact on independent schools

IndependentSchools’Conference1 February 2016

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Employer provided living accommodation

Whilst no changes to the legislation were announced in the Autumn Statement, the Government will be publishing a consultation on employer-provided accommodation at Budget 2017.

haysmacintyre commentIt is clear that changes will be made to the tax and National Insurance rules connected with employer provided living accommodation. We await the terms of reference of the consultation paper once it is published.

Contact usIf you have any questions concerning the proposed changes to salary sacrifi ce or the impending consultation in respect of employer provided living accommodation, please do not hesitate in contacting Nick Bustin our Director of Employment Tax (on the contact details below), or your usual haysmacintyre contact.

Nick Bustin, Director of Employment Tax at haysmacintyreT 020 7969 5578 E nbustin@haysmacintyre.com