Employers and employees will need to be ready for the removal of tax advantages as a result of the new optional remuneration arrangement (OpRA) rules, Aon Employee Benefits has warned.
The provider believes that the changes, which at the latest will apply from 6 April 2018, will have a big impact on two mainstays of flexible benefit arrangements, group life assurance and group income protection.
A poll of delegates at Aon’s events suggested that around 40% of employers were utilising the ‘grandfathering’ option to maintain the previous taxation position. However, this is a short-term solution that can only be used until the next renewal date of the benefit or 5 April 2018, whichever occurs first.
‘The majority of clients are realising their current designs or procedures need to be refined or even fundamentally changed,’ said Catherine Stait, principal at Aon Employee Benefits.
‘We urge employers to make well-informed decisions to avoid disgruntled employees, but we are equally cautioning against the existing rationale for designs being automatically disregarded just because of potential benefit in kind (BIK) implications. In short, the benefit in kind tail shouldn't wag the flexible benefits dog,’ she added.
