Employers and employees need to be ready for tax changes arising from new Optional Remuneration Arrangement (OPRA) rules applying from April 2018, according to Aon Employee Benefits. The tax changes introduced by the new rules affect two of the mainstays of flexible benefit plans – group life assurance and group income protection – and will apply from 6 April 2018 at the latest as part of changes to salary sacrifice rules contained in the Finance Act 2017.
Many employers have locked down flexible benefit choices for employees until their next renewal as a short-term way of maintaining the previous tax position, but this can only be done until April 2018 at the latest.
Catherine Stait, principal at Aon, said:
‘The majority of clients are realising their current designs or procedures need to be refined or even fundamentally changed. We urge employers to make well-informed decisions to avoid disgruntled employees, but we are equally cautioning against the existing rationale for designs being automatically disregarded just because of potential benefit-in-kind implications. In short, the benefit in kind tail shouldn’t wag the flexible benefits dog.’