EEF has responded to the HMRC's consultation on salary sacrifice for the provision of benefits in kind.
There are a number of EEF members who current provide a range of benefits to their employees by using the salary sacrifice platform. The platform has existed for a considerable period of time and has for some workplace benefits now become an essential part of businesses’ rewards structure.
In consultation with EEF there was a general reaction that the consultation provides too little detail and failed to make the case for the changes proposed. The consultation does not specify what the cost to the Treasury of supporting all the current schemes is, or the cost of supporting those schemes which government has chosen to exclude from the consultation. Similarly, there is no apparent assessment of the indirect cost to employers of the changes to the current salary sacrifice arrangements, nor an assessment of the likely reaction of workers and their employers.
Finally, some EEF members were of the view that the proposed changes would undermine other government policies. Previously, government has encouraged car owners to buy newer vehicles as one way of reducing the UK’s CO2 levels. Recently, government has underlines the need for the UK to invest in digital skills, the need to invest in IT literacy and talked of the need to ensure that every home has access to high speed broadband. There is little point in this if home do not have access to latest technology and salary sacrifice provides a cost effective means for employers to support their workers in making what for many is a substantial financial investment.
We therefore believe that on the basis of the limited information provided there is no compelling case made out for any substantial alternation to the current tax regime, and that change is likely to reduce the benefits which employees receive with the administrative support of their employers.
Read our full response below.