As of 6 April, all Benefits in Kind (BiK), including those covered under Optional Remuneration Arrangements (OpRAs) need to be reported to HMRC on form P11D, unless the employer is registered to voluntary payroll benefits.
An OpRA is where an employee gives up the right to an amount of earnings in return for a BiK. This includes flexible benefit packages with a cash option, cash allowances and salary sacrifice. As a result of the OpRA rules, the income tax and employer National Insurance contribution (NIC) advantages of BiKs and employee NIC advantages, have mainly been withdrawn.
Although OpRA rules were introduced last April, transitional provisions were put in place to exempt arrangements that were entered into before 6 April 2017. This transitional period ended as of 6 April 2018. However, where the benefit is the provision of a car with emissions of more than 75g CO2/km, living accommodation or school fees, the new rules will not apply until 6 April 2021.
If a BiK is provided under OpRA rules, the taxable value is now the higher of: the cash foregone or the taxable value under the normal BiK rules. This applies to all BiKs, including those that were previously exempt, such as workplace parking.
Pensions, pension advice, childcare, cycle-to-work schemes and cars with emissions of 75g CO2/km or less are not affected by the OpRA rules.
The Learn Centre has launched a new half-day course to coincide with the end of the transitional arrangements. The Salary Sacrifice and Optional Remuneration Arrangements course goes through change management and reporting as well as detailed working examples to support finance, HR and payroll professionals to prepare for tax year end.
