Good

Philip Hammond will this week announce a raid on job perks enjoyed by millions of middle earners, including health checks, gym memberships and mobile phone contracts.

The Sunday Telegraph has learnt that the Autumn Statement will tighten rules that allow workers to forgo part of their salary in return for certain work benefits.

The move, described as a “stealth tax” by critics, will mean employees at big firms across Britain will be forced to pay hundreds of pounds to continue to receive perks they get through work.

The salary sacrifice schemes. The company provides you with whatever, gym membership say, you don’t pay income tax on it, they don’t pay NI.

It’s a not very sensible distortion in the system and as such should go. Pay the cash and let people buy what they want out of taxed income.

The biggest danger with these sorts of twee policies is the temptation it gives to idiots to add more things to the list of eligible items. Each addition just adding yet more distortion to the system. Gives those who would manage society a field day in “picking winners.”

28 thoughts on “Good”

  1. Bloke in North Dorset,

    Did you see that HMRCis shutting down a tax avoidance scheme for the British film industry? That should make the LHTD’s head explode, luvvies deemed to be tax evaders, sorry, avoiders.

  2. Gives those who would manage society a field day in “picking winners.”

    Not so much “picking winners” as nice libtard interventionist “nudge politics”. Still all bullshit obviously.

  3. Most of these aren’t “perks” by my definition.

    A perk is something like: you work in a video rental store and can take home movies at the end of the day (as long as you return them before opening time). Or, you get to shag lonely MILFs, like my mate who’s a cable installer does (OK, only twice). Or, you do some work on the website of a mostly retired rock star, and one day after a meeting, he offers to drive you to the train station in his vintage Ferrari. There’s also those things like car companies that give discounts on cars. Which is partly that they have no cost of sales and can get lots of feedback information.

  4. It would be fairer to call the perks “stealth wages” rather than calling dealing with them “stealth taxes”

  5. Perhaps the tax guys here can provide clarity, but are some speculating that it may only be “salary sacrifice” that wull be attacked, not ordinarily negotiated T&C. Resulting in different treatment for different people for the same item, eg mobile phones or whatever?

    Which really would be bonkers. I only skipped over it very briefly last night, hopefully the sites I looked at were out of date?

  6. Stigler

    “Most of these aren’t “perks” by my definition.”

    There is certainly lots of grey. Eg, mobile phone versus i-pad versus computer you use at your employer’s desk versus the desk and chair.

    Define “mostly” business use if that’s the cut-off point. Or “no private use” – so no ringing home to agree schedule / say you’re going to be late.

    I don’t think you can completely get rid of grey. But it would be a hell of a start (after Brown and Osborne) if someone at least tried to reduce the number of shades.

  7. I hope the cycle to work scheme ends up in the bin. The barrier to new participants in cycling is fear not cost. This has been a bung to people who would pedal to work anyway on bikes which would be pro-standard if made 20 years earlier.

    Some nice perks are things like car sharing databases, a block parking system, classified ads on your intranet, and flexibility.

  8. I’m guessing these ‘perks’ will be addressed by increasing the tax burden to harmonise different categories of compensation, rather than reducing the tax burden to harmonise.

    Just a hunch.

  9. Aren’t gym memberships excluded anyway? There’s a short discussion here. For example, if the company has a private gym in the basement then you can let your employees use it for free; but you can’t pay for a normal high-street gym for them.

  10. In Australia salary sacrifice is a gigantic scam. The things you can sacrifice are partly negotiated by unions, so you end up with things like nurses being able to salary-sacrifice their rent or mortgage payments. No, that’s not an exaggeration.

    http://smartblog.smartsalary.com.au/top-5-salary-packaging-items-nurses/

    Public hospital workers are able to set aside up to $9,010 of their pre-tax salary each FBT year (1 April-31 March) for items such as rent, mortgage repayments, groceries and utility bills. This is one of the most popular benefits for those working in the not-for-profit sector.

  11. The plan, so far as I’m aware, is to say that if you’re currently on a salary of £X, and you drop to a salary of £Y plus benefits, then you’re taxed and NICked as if you still had £X of salary.

    If you currently have a salary of £Y, and your employer gives you benefits but no pay rise, then the new rules don’t kick in so you’re taxed differently on exactly the same package.

    If you currently have salary of £Y, and your employer offers you either a pay rise or some non-cash benefits, then I’m not sure where you end up.

    If HMRC would adopt what the Office of Tax Simplification are saying – with which I fully agree – and simply say that pay and benefits should be tret identically for tax and NI, then this whole farrago goes away and life gets far simpler, less arbitrary, and fairer.

    Note that there are two options here: Sweep a complex system away in favour of something clean, simple, and fair; or keep the complex system and layer more and more anti-avoidance on it to ensure that people who currently avoid tax can continue to do so (because clearly that isn’t really avoidance, or HMRC would have put an end to it already) but those who don’t do it yet can’t start (because if you were entitled to you’d already be doing it).

  12. “Note that there are two options here: Sweep a complex system away in favour of something clean, simple, and fair”

    Early days admittedly, but if this is a steer then perhaps it looks as if Hammond might not be up to it.

  13. it looks as if Hammond might not be up to it.

    I doubt he’s up to anything more than standing by the Thames in waders and looking forlorn.

    Indeed given the rain that’s fallen in the South East overnight, he’s probably doing just that after getting off Marr’s sofa.

  14. In the past I’ve ‘benefitted’ from salary sacrifice in the matter of pension contributions and the cycle to work scheme – things I was happy to do in order to reduce, if only fractionally, the amount the state steals from me on a monthly basis. Items like gym membership and health care however have always been dealt with as taxable benefits.

  15. Personally I benefit from a SSS. Whilst I agree with simplifying it I think it should be phased in so as to not harm people like me who took it out in good faith. Governments need to be fair and predictable

  16. “so as to not harm people like me who took it out in good faith”: if they were to abolish it in such a way that you were penalised for having had it, your point would be fair.

    If all you mean is “I like this perk so please continue”, that’s no argument at all.

  17. They abolished child benefit for anyone earning over £60k. There was no phasing-in, no grandfathering of existing rights, no special treatment for anyone who “took it out in good faith”. I don’t see why these perks should be any different.

  18. This is why I hate schemes like paying welfare benefits in vouchers or paying direct to landlords, etc. It’s the claimant’s claim, not Sainsbury’s claim or Northern Housing’s claim. It will be spent more efficiently – and with more human dignity – if it is paid as freely-exchangable foldables direct to the claimant.

    The bogeyman of “oooo, but claimants are morons who can’t budget” is not a welfare benefits issue, it’s a individual’s coping-with-life issue and should be addressed by providing help to individuals, not by telling the whole human race “there there, just sit there and behave, we know how to spend you money, you’re a moron”.

  19. Given that many payrolls are administered by outsourcers such as Andersen, and how much complexity was created by those schemes, which benefitted Andersen more than anyone, these schemes should be made mainstream by stating that they are just BiKs

  20. Lefty,

    > Thoughts on making healthcare non taxable to encourage take up?

    Because if you exempt healthcare from tax, why stop there? Let’s exempt childcare. Let’s exempt commuting costs. Let’s exempt vegetables, because we want people to eat healthily. Let’s exempt opera tickets, because culture. Let’s exempt staycations, because we want to boost the British seaside. And so on. It’s an accountant’s wet dream, and a nightmare for the rest of us.

  21. I am in favour of a level playing field on tax. And the chief beneficiaries of distortions are those who are on higher-rate tax so would lose very little by tax simplification and cutting out of all the HMRC costs and the tax advisors.

  22. New Zealand makes pretty much all payments to an employee taxable, whether in cash or in kind.

    Initially it created a kerfuffle as lots of people gaming the system lost their benefits. Now it is seen as fair and simple.

    There’s no reason it can’t be done, and every reason it should be done.

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