Stealth Tax on Employee Benefits

Stealth Tax on Employee Benefits.

A consultation paper has been issued by HMRC targeting employee benefit schemes that reduce employees and/or employers tax liabilities.

We already saw in the budget of July 2015, salary sacrifice schemes being attacked with any new salary sacrifice scheme set up after 8^th July not being allowed to reduce your ‘gross earnings’ calculation when working out maximum yearly pension contribution allowances.  In addition, employees were blocked from giving up salary to get other non-taxable benefits. 

Now, HMRC is looking to target other schemes that work on the basis of employers offering ‘tax free’ loans for things like mobile telephones and travel passes, monthly repayments then deducted from gross salary this saving taxes and national insurance contributions.

Comment

This has much greater repercussions than many may think.  What about child care voucher schemes, lunch voucher schemes and other subsidized schemes such as employee mortgage schemes, share option schemes etc.

Employers are keen to attract and retain quality employees by offering good employee benefits.  It seems that this government is hell bent on discouraging people to save for retirement or invest in their employer or go for promotion.  All for the sake or raising tax revenue, yet it happily allows the wealthy to settle money into trusts to avoid many taxes.