Optional remuneration arrangements

Produced by Tolley in association with

Employment Tax

Guidance

Overview

Effective from 6 April 2017, legislation on optional remuneration arrangements (OpRA) added a further consideration to the taxation of benefits provided through salary sacrifice. This legislation adds to the removal of tax advantages for canteens, home computers and travel payments provided through salary sacrifice which were already in place before the OpRA rules.

The most comprehensive HMRC guidance in relation to OpRA is provided at EIM44000 onwards.

The conditions required in order to implement an effective salary sacrifice agreement are set out in the Salary sacrifice arrangements ― overview guidance note, and are unaffected by the OpRA rules. However, the OpRA rules may in turn affect the tax efficiency of certain salary sacrifice agreements.

The OpRA rules apply to two types of situation:

•
sacrificing current salary in favour of a benefit (‘traditional’ salary sacrifice) ― ‘Type A arrangements’
•
foregoing future salary / earnings (this is harder to ascertain) ― ‘Type B arrangements’

Whilst the first is generally understood, the ‘Type B’ question, of to what extent the employee “agrees to be provided

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Robert Woodward

Employment Tax Manager at Frank Hirth plc

Robert is an expert in UK employment tax matters for employers with UK based employees, including UK employees working overseas, and overseas employees coming to the UK. He has extensive experience of advising clients with regards to PAYE matters, employee benefits and social security as well as employment related payments outside the payroll functions such as termination settlements and payments to consultants and other non-payroll labour. After graduating in Politics and Law from the University of Southampton, Robert started his tax career at HMRC as an employer compliance officer undertaking enquiries into employers' expenses and benefits systems before moving into a large international practice and then into the Big 4. Here he assisted with tax investigations, flexible benefits planning, employment tax compliance and international social security. Robert has presented to various audiences and has had a number of articles published in various magazines on employment tax matters. Robert is a fully qualified member of both the Association of Taxation Technicians (ATT) and the Chartered Institute of Taxation (CTA).

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