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Corporate Adviser - Group risk hit by new tax and NI charges

New tax and National Insurance charges will be levied on group income protection (GIP) and excepted group life insurance (EGLP) offered through flexible benefit arrangements run through salary sacrifice, the Government has confirmed.

HMRC has confirmed that both GIP and EGLP will fall in scope for changes to the taxation of salary sacrifice optional remuneration arrangements (OpRAs) which come into force in less than five weeks’ time. Its draft legislation published in December 2016 had made no mention of GIP and EGLP, raising hopes the products had been excluded from the new rules.

The changes mean that from April 2017 employees flexing up GIP cover from a base level through salary sacrifice will be hit with income tax on the value of the benefit. Employers will from April 2017 have to pay National Insurance on the value of the benefit. A saving to the employee in terms of employee NI, will remain however.

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