Page 12 - Budget Newsletter 2021

Salary sacrifice

The Treasury’s 2017 measures to curtail the use of optional remuneration arrangements (OpRA) (salary sacrifice
schemes) have now bedded in. Most arrangements are now subject to employer’s NICs (and taxed on the employee)
based on the amount of salary given up rather than the notional value (if any) of the fringe benefit received. All the
remaining transitional provisions for pre-6 April 2017 arrangements have now expired.

Salary sacrifice for pension contributions remains favourably treated and fully exempt from the rules. Cars with CO2
emissions of 75g/km or less – typically electric or plug-in hybrids – are also exempt, which helps to explain why Teslas,
Zoes and their ilk have become a more common sight in the UK. These exemptions from the OpRA rules are set to
become more popular thanks to the 1.25 percentage points increases in employers’ and employees’ NICs that take
effect from 2022/23.

PLANNING POINT

The exemption given from the OpRA rules to low emission vehicles makes these worth considering if you want
to exchange salary for a company car.

Business Rates

The pandemic prompted the introduction of a range of initiatives on business rates and grants based on business
rateable values, the most significant of which was probably the business rates holiday for retail, hospitality and leisure
businesses, which ended on 30 June 2021. This was replaced by a more restricted 66% business rates relief aimed at
smaller businesses which will end on 31 March 2022.

In June, the Treasury launched a consultation on increasing the frequency of property revaluations for the English
business rates system to every three years, rather than five. At present business rates are based on 2015 valuations,
with the next change due to use 2021 valuations from 2023.

At the time the consultation was published, the Treasury said that it formed one part of a ‘Fundamental Review of
Business Rates, which will be published later this Autumn’. The measures announced in the Budget were not as radical
as some might have hoped:

• The business rates multiplier will be frozen for a second year, from 1 April 2022 until 31 March 2023.

• A new temporary business rates relief will be introduced for eligible retail, hospitality and leisure properties for
2022/23. Eligible properties will receive 50% relief, up to a £110,000 per business cap.

• A 100% improvement relief will be introduced, providing 12 months relief from higher bills for occupiers where
eligible improvements to an existing property increase the rateable value. The Government will consult on how
best to implement this relief, which will take effect in 2023 and be reviewed in 2028.

• From 1 April 2023 until 31 March 2035 targeted business rate exemptions will be available for eligible plant and
machinery used in onsite renewable energy generation and storage, and there will be a new 100% relief for
eligible heat networks.

• Business rates revaluations will take place every three years, starting in 2023.

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