Salary Sacrifice
Discussion
anonymous said:
[redacted]
That doesn't work - its a benefit in kind and as such is liable to IT and NI just like salary...
ETA Salary sacrifice is usually assigning a part of your payroll cost to a pension scheme or suchlike, which does not attract IT or NI.
Edited by Size Nine Elm on Monday 8th January 20:21
anonymous said:
[redacted]
I think you're thinking of this www.hmrc.gov.uk/news/home-computer.htm which as you will see is being phased out.
Governments hate "Salary Sacrifice".
What happens is this -
the government invents a scheme to encourage employees to behave in a certain way. To make the scheme attractive to employers, they tell employers that the new service being provided to the employee will not be taxable or liable to NI They intend that the employer will provide these new services in addition to the employees normal gross salary.
What the employer does, is CUT the employee's salary and makes up the value of the reduction in the form of the new government scheme.
Areas where salary sacrifice schemes have been used are -
employee share profit schemes
employer provided creche and childcare facilities
employer provided computers
When the government see employers using these schemes to actually CUT employees' wages, they usually withdraw the scheme.
What happens is this -
the government invents a scheme to encourage employees to behave in a certain way. To make the scheme attractive to employers, they tell employers that the new service being provided to the employee will not be taxable or liable to NI They intend that the employer will provide these new services in addition to the employees normal gross salary.
What the employer does, is CUT the employee's salary and makes up the value of the reduction in the form of the new government scheme.
Areas where salary sacrifice schemes have been used are -
employee share profit schemes
employer provided creche and childcare facilities
employer provided computers
When the government see employers using these schemes to actually CUT employees' wages, they usually withdraw the scheme.
anonymous said:
[redacted]
Many of the comments at the end of that article are just ridiculous ("I'll never be able to afford a PC now" etc). Both desktops and laptops have dropped in price tremendously over the last few years, way more than any tax advantage that existed a few years ago, particularly for those paying tax at lower rates.
Eric Mc said:
Governments hate "Salary Sacrifice".
What happens is this -
the government invents a scheme to encourage employees to behave in a certain way. To make the scheme attractive to employers, they tell employers that the new service being provided to the employee will not be taxable or liable to NI They intend that the employer will provide these new services in addition to the employees normal gross salary.
What the employer does, is CUT the employee's salary and makes up the value of the reduction in the form of the new government scheme.
Areas where salary sacrifice schemes have been used are -
employee share profit schemes
employer provided creche and childcare facilities
employer provided computers
When the government see employers using these schemes to actually CUT employees' wages, they usually withdraw the scheme.
What happens is this -
the government invents a scheme to encourage employees to behave in a certain way. To make the scheme attractive to employers, they tell employers that the new service being provided to the employee will not be taxable or liable to NI They intend that the employer will provide these new services in addition to the employees normal gross salary.
What the employer does, is CUT the employee's salary and makes up the value of the reduction in the form of the new government scheme.
Areas where salary sacrifice schemes have been used are -
employee share profit schemes
employer provided creche and childcare facilities
employer provided computers
When the government see employers using these schemes to actually CUT employees' wages, they usually withdraw the scheme.
Not strictly accurate, Eric.
HMRC is quite happy for salary sacrifice schemes to be put in place and don't really want to know of the amounts involved anymore. I have never come across a case of xzuch a scheme being withdrawn because of HMRC or Government action, unless not set up correctly
The advantages to employees are manifold, in that they can obtain certain benefits in a tax and NI efficient way. For some people it is a very good way of making pension contributions. Childcare vouchers is another example.
However, there are a number of quite serious disadvantages. One's ability to borrow will be affected, because of one's lower salary. State benefit entitlements can be affected. From an employer's perspective, salary sacrifice arrangements can be expensive to run.
The HMRC website has more detail: www.hmrc.gov.uk/specialist/salary_sacrifice.pdf
Ther example I had in mind were the various Employee Profit Share Schemes. These usually involved some form of "Salary Reduction" for the employee - which was not what the Government intended when the scheme was originally introduced.
The scheme was therefore withdrawn explicitly because the Government felt it was being abused by employers. The Salary Sacrifice element of the "abuse" (there were others) was a major factor in the Government's decision to withdraw the scheme.
The Computer Scheme was mainly withdrawn because it was felt that "non-computer" equipment was being bought for amusement by "Directors" for themselves and their families.
The scheme was therefore withdrawn explicitly because the Government felt it was being abused by employers. The Salary Sacrifice element of the "abuse" (there were others) was a major factor in the Government's decision to withdraw the scheme.
The Computer Scheme was mainly withdrawn because it was felt that "non-computer" equipment was being bought for amusement by "Directors" for themselves and their families.
We've just had our benefits reviewed to include salary sacrifice options. One of which is similar to the HCI but different.
It is run through www.redpc.co.uk and it is a computer training package, where you buy online training off them and they provide you with a PC to do the training on. I guess it is exploiting a loophole that still exists, but prevents companies from letting employess buy iPods and Plasma screens under the HCI.
It may be worth checking out and taking to your MD.
It is run through www.redpc.co.uk and it is a computer training package, where you buy online training off them and they provide you with a PC to do the training on. I guess it is exploiting a loophole that still exists, but prevents companies from letting employess buy iPods and Plasma screens under the HCI.
It may be worth checking out and taking to your MD.
Salary sacrafice is alive and well, although I am unaware of any PC related ones. However, it is possible to sign up to a scheme that will give you discounts at stores that sell PC's. We are considering launching a scheme at the moment and I am also talking to 2 existing companies so if you want some contacts mail me. Out the office until next week though o can't get you the details until then.
BigAlinEmbra said:
Totally unhelpful I'm afraid, but I managed to do exactly this with a PC through work.
£900 PC for a £15 deduction monthly over 3 years.
Glad I got in while I could!
£900 PC for a £15 deduction monthly over 3 years.
Glad I got in while I could!
That's great, but as I said further up; if you're talking about a £900 PC from 3 yrs ago then you could probably buy something 2-3 times as powerful for half the cost today. OK, it'd still be great to do that tax free, but for basic rate tax payers you're talking about saving £100 which is hardly make or break and certainly doesn't justify the scheme.
I did see a news item this morning that the Government is going to try to make sure all pupils have home access to the Internet - but no details yet.
deva link said:
BigAlinEmbra said:
Totally unhelpful I'm afraid, but I managed to do exactly this with a PC through work.
£900 PC for a £15 deduction monthly over 3 years.
Glad I got in while I could!
£900 PC for a £15 deduction monthly over 3 years.
Glad I got in while I could!
That's great, but as I said further up; if you're talking about a £900 PC from 3 yrs ago then you could probably buy something 2-3 times as powerful for half the cost today. OK, it'd still be great to do that tax free, but for basic rate tax payers you're talking about saving £100 which is hardly make or break and certainly doesn't justify the scheme.
I did see a news item this morning that the Government is going to try to make sure all pupils have home access to the Internet - but no details yet.
This was one year ago, and to me avoiding 22% basic tax plus 11% NI makes a lot more than £100 on a £900 computer. Your argument on falling prices seems a bit irrelevant too. Are you suggesting that everyone considering a new computer now should hold off on the basis that in 3 years time they'll get something better for less?
BigAlinEmbra said:
deva link said:
BigAlinEmbra said:
Totally unhelpful I'm afraid, but I managed to do exactly this with a PC through work.
£900 PC for a £15 deduction monthly over 3 years.
Glad I got in while I could!
£900 PC for a £15 deduction monthly over 3 years.
Glad I got in while I could!
That's great, but as I said further up; if you're talking about a £900 PC from 3 yrs ago then you could probably buy something 2-3 times as powerful for half the cost today. OK, it'd still be great to do that tax free, but for basic rate tax payers you're talking about saving £100 which is hardly make or break and certainly doesn't justify the scheme.
I did see a news item this morning that the Government is going to try to make sure all pupils have home access to the Internet - but no details yet.
This was one year ago, and to me avoiding 22% basic tax plus 11% NI makes a lot more than £100 on a £900 computer. Your argument on falling prices seems a bit irrelevant too. Are you suggesting that everyone considering a new computer now should hold off on the basis that in 3 years time they'll get something better for less?
What I'm saying is that the scheme was useful (essential, perhaps) when computers were expensive but now they're so much cheaper.
You'd have to go some to spend £900 on desktop computer - even a year ago. Maybe computers bought throught the scheme are overpriced?
A desktop, perfectly adequate for everyday use, surfing the net etc, can be bought from around £250 now. £450 would get a pretty good one.
deva link said:
BigAlinEmbra said:
deva link said:
BigAlinEmbra said:
Totally unhelpful I'm afraid, but I managed to do exactly this with a PC through work.
£900 PC for a £15 deduction monthly over 3 years.
Glad I got in while I could!
£900 PC for a £15 deduction monthly over 3 years.
Glad I got in while I could!
That's great, but as I said further up; if you're talking about a £900 PC from 3 yrs ago then you could probably buy something 2-3 times as powerful for half the cost today. OK, it'd still be great to do that tax free, but for basic rate tax payers you're talking about saving £100 which is hardly make or break and certainly doesn't justify the scheme.
I did see a news item this morning that the Government is going to try to make sure all pupils have home access to the Internet - but no details yet.
This was one year ago, and to me avoiding 22% basic tax plus 11% NI makes a lot more than £100 on a £900 computer. Your argument on falling prices seems a bit irrelevant too. Are you suggesting that everyone considering a new computer now should hold off on the basis that in 3 years time they'll get something better for less?
What I'm saying is that the scheme was useful (essential, perhaps) when computers were expensive but now they're so much cheaper.
You'd have to go some to spend £900 on desktop computer - even a year ago. Maybe computers bought throught the scheme are overpriced?
A desktop, perfectly adequate for everyday use, surfing the net etc, can be bought from around £250 now. £450 would get a pretty good one.
Are you trying to say that £450 is the max you'll pay for a computer now? Higher end desktops and laptops are still around £900.
http://configure.euro.dell.com/dellst
http://configure.euro.dell.com/dellst
It is a dell desktop, and the "book" price was within £20 of what dell were offering it for at the time.
A computer of the same spec now is still £629, so after a year's use my £540 deal is looking pretty good to me.
You still don't get that comparing prices now to last year is totally irrelevant, do you? If people always said "I'm not spending £450 now (your example), it'll only be £300 in a year", how many computers would sell?
Are you saying if you got offered a brand spanking new dell with a 33% discount when you were already looking for a new computer you'd say no?
BigAlinEmbra said:
Are you trying to say that £450 is the max you'll pay for a computer now?
No - I'm saying:
deva link said:
A desktop, perfectly adequate for everyday use, surfing the net etc, can be bought from around £250 now. £450 would get a pretty good one.
BigAlinEmbra said:
You still don't get that comparing prices now to last year is totally irrelevant, do you?
It's not the timescale that's the issue - it's pre-scheme and post-scheme. The point of the scheme was to help less well off people afford computers which used to be expensive. Now that they're available much more cheaply, the scheme is un-necessary.
BigAlinEmbra said:
Are you saying if you got offered a brand spanking new dell with a 33% discount when you were already looking for a new computer you'd say no?
Of course not - I'll take anything I can get. However the point is that as prices have dropped, that 33% becomes less of an issue. Purchase price isn't the barrier that it once was.
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