Amanda Wilkinson, editor, Employee Benefits: Tax-friendly perks could soon become a thing of the past if the government continues with its apparent clampdown on taxation rules that benefit employees, unless employers make a stand.
The warning shot was fired last year when the then Chancellor of the Exchequer, Gordon Brown, suddenly axed the tax-efficient home computing initiative.
The latest salvo has come in the form of Alistair Darling’s pre-Budget statement, made last month. Not only did he withdraw the national insurance saving rules around holiday pay funds, but the Chancellor also announced a review into the tax treatment of benefits in kind. Furthermore, his decision to impose a flat rate on capital gains tax had the unintended consequence of potentially increasing the tax paid by individuals who have become shareholders through company sharesave schemes and have held onto their shares.
In between these heavy blows, HM Revenue & Customs has also been busy reviewing employee assistance programmes and tightening up the rules around health screening by specifying that the perk will only be free from tax if it is provided, meaning paid for, by employers for all their staff.
However, encouragingly, HMRC has listened to industry concerns, and has decided to effectively put the changes around health screening on hold pending a consultation. This shows that if valid points are raised by both employers and providers, the powers that be may well listen.
This is also the view of Charles Cotton, reward and employment conditions adviser at the Chartered Institute of Personnel and Development, who believes reward professionals should be more engaged with influencing public policy.
It is true that without your input, ill-thought out legislation or new tax rules could adversely affect carefully-constructed benefits schemes that are designed to attract and retain talent. Recently, there have been industry rumblings that the government may change the tax rules so that the option of salary sacrifice around pension contributions could be closed ahead of the introduction of personal accounts. Do you really want this to happen? If not, make sure you have your say before it is too late.
Amanda Wilkinson, Editor