COVID-19: Optional remuneration arrangements not ‘varied’ if cause is coronavirus
14 April 2020: HMRC has confirmed that changes to salary sacrifice schemes caused by the coronavirus pandemic will retain transitional relief from the optional remuneration arrangement (OpRA) rules.
In an update to its guidance on OpRA, HMRC has made explicit reference to the coronavirus to clarify that changes to benefit schemes as a result of the pandemic will retain any transitional relief.
The OpRA rules came into force from 6 April 2017 and largely withdrew the tax and NIC advantages of providing employees with benefits through salary sacrifice schemes. However, there were a number of transitional provisions – some of which continue until 6 April 2021. Examples include:
- the provision of a car with emissions of more than 75g CO2/km,
- living accommodation, or
- school fees.
Under the transitional provisions for these benefits, where the salary sacrifice arrangement was entered into before 6 April 2017, it would continue to be subject to the pre-2017 benefit valuation rules until 6 April 2021 unless the arrangement was subject to a variation, renewal or modification. In which case the arrangement would be subject to the OpRA rules.
HMRC’s guidance on variations during the transitional period already stated that changes to the arrangement for reasons “beyond the control of the parties” would not be seen as a variation and the transition relief would continue.
On 9 April HMRC amended its guidance to add:
“An arrangement is not regarded as varied if the amendment is caused by the coronavirus (COVID-19).”