From 6 April 2017, if you set up a new salary sacrifice arrangement, you’ll need to work out the value of a non-cash benefit by using the higher of the:

• amount of the salary given up
• earnings charge under the normal benefit in kind rules

If you set up a salary sacrifice arrangement with an employee before 6 April 2017, you can continue to calculate the value of the benefit as you did before. This only relates to specific arrangements with an employee, not to your overall salary sacrifice policy.

The arrangement will be subject to new rules if the arrangement is varied, renewed or modified unless the change is:

• connected to an employee’s statutory sick pay
• connected to an employee’s maternity, paternity, adoption or shared parental pay
• out of the control of the employee and employer (like a damaged contract)

Most existing arrangements set up before 6 April 2017 will automatically be subject to the new rules from 6 April 2018. However, arrangements will not be subject to the new rules until 6 April 2021 unless they are varied, renewed or modified if they are for:

• cars with CO2 emissions of more than 75g/km
• accommodation
• school fees (even if varied, renewed or modified as long as the arrangement relates to the same child and school)

Full updated HMRC guidance can be found here.