Highlights of the draft FB 2017 employment tax provisions

The draft provisions for inclusion in Finance Bill 2017 include provisions on terminations payments and salary sacrifice. Both sets of provisions are largely as expected, although the revised draft on termination payments provides clarity on the removal of foreign service relief; and they also ensure that it is only the equivalent of the employee’s basic pay for the unworked notice period that will be taxable as earnings, rather than all compensation for benefits and bonus that would have been received during the unworked notice period, as originally planned. The transitional rules on salary sacrifice may require careful consideration in some cases of what constitutes a variation or renewal.