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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:

1. •

   sacrificing current salary in favour of a benefit (‘traditional’ salary sacrifice) ― ‘Type A arrangements’

2. •

   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