HMRC have started a consultation to explore potential impacts on employers and employees should the Government decide to change the way the benefits code applies when a benefit-in-kind (BiK) is provided in conjunction with a salary sacrifice or flexible benefit scheme. In the Budget 2016, the Government announced it was considering limiting the range of BiKs that attract income tax and NICs advantages when they are provided as part of salary sacrifice schemes. Pension saving, employer-supported childcare and the cycle to work scheme will continue to benefit from income tax and NICs relief when provided through salary sacrifice arrangements. However, the Government does not believe that other BiKs, effectively paid for by employees themselves through reductions in gross salary, should be able to be provided by employers at a cost to the Exchequer through salary sacrifice arrangements.

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