Many of Scotland’s employers are unprepared for sweeping changes to the “salary sacrifice” scheme due to take effect in the new year, experts have warned.
Chancellor Philip Hammond formally announced changes to the system in his Autumn Statement, effectively scrapping most of the arrangements currently in place.
The programme enables staff to give up part of their salary in return for benefits-in-kind, ranging from dental insurance to bicycle hire. It essentially enables people to bypass certain tax and national insurance payments, meaning “perks” such as insurance and childcare can be substantially cheaper.
Estimates suggest that salary sacrifice has been costing the UK government more than £15 billion a year, prompting the recently unveiled changes. The move means that from April 2017, employers will need to ensure that staff are fully aware of what benefits they are and are not entitled to.
Monica Houston, tax manager at accountant and business adviser Grant Thornton in Scotland, said: “The end of salary sacrifice was widely predicted, but it doesn’t mean it’s impact won’t be felt by many employers and employees throughout Scotland. The good news is that some of the most popular benefits will still be available such as childcare.”
She added: “Arrangements in place before April 2017 for certain benefits will also be protected but employees need to assess their position now to see what impact the changes will undoubtedly have on their net cash position.”
Businesses owe £1.8bn in late corporation tax
British businesses now owe just over £1.8 billion in late corporation tax, up 15 per cent in the past 12 months, according to a new study.
Experts warn that as Brexit takes its toll on economic growth, companies are likely to have even less cash to pay their tax bills as clients and customers delay payments.
Today’s report by Funding Options, an online business finance supermarket, reveals that the total value of corporation tax payments in arrears has to £1.82bn from £1.59bn a year earlier. The firm said smaller businesses were at particular risk of having their assets seized because of volatile cash flows, making it more likely that they fall behind on tax payments.
Funding Options’ boss Conrad Ford said: “These figures demonstrate the growing pressure on cashflow for companies, which could get worse following the outcome of the EU referendum. Businesses need to have adequate funding to pay tax bills on time.”