More Orange Genie / Salary Sacrifice Woes

**eek** · 11 May 2021, 10:38

Originally posted by Great Britten View Post

I started a 2 month contract with the intention of sticking everything into my pension as I was IR35 caught and forced to go via a brolly.

I have now been extended for another 2 months and it seems I can't opt out of salary sacrifice which seems to be set in stone. They tell me:

You can only make amendments to your salary sacrifice for the following reasons which have been set out by HMRC:

- Changes to circumstances directly arising as a result of coronavirus
- Marriage
- Divorce
- Partners becoming redundant or pregnant
- Additional children in the household such as stepchildren or adoption

I don't know how to sort this out because I don't know if I've committed to doing salary sacrifice for the whole year regardless of which brolly I'm with? If not I guess I'll just switch brollies for the extension period.

A question I have asked OG but their comms are so awful it will be days before I get a response :-(

Switch umbrella and you can start again.

But the actual statement from Salary sacrifice for employers - GOV.UK (www.gov.uk) is:

If your employee wants to opt in or out of a salary sacrifice arrangement, you must alter their contract with each change. Your employee’s contract must be clear on what their cash and non-cash entitlements are at any given time.

It may be necessary to change the terms of a salary sacrifice arrangement where a lifestyle change significantly alters an employee’s financial circumstances.

This may include:

changes to circumstances directly arising as a result of coronavirus (COVID-19)
marriage
divorce
partner becoming redundant or pregnant

Salary sacrifice arrangements can allow opting in or out in the event of lifestyle changes like these.

As a general rule, if an employee swaps between cash earnings and a non-cash benefit whenever they like, any expected tax and National Insurance contributions advantages under a salary sacrifice arrangement will not apply. There are some exceptions to this, Employment Income Manual 42755 gives more information.

And note the word used is always MAY not CAN...

And I really don't think HMRC would argue that an (unexpected) contract renewal did not warranty a significant change in financial circumstances.

**Great Britten** · 11 May 2021, 10:58

Wow, I had no idea.

So if I'd signed up for a 6 month contract and opted into salary sacrifice, I wouldn't have been able to have opted out throughout the duration of the contract even if I'd switched brollies. Food for thought to DYOR I guess. But thanks, anyway. I had no idea it was that inflexible.

**eek** · 11 May 2021, 11:27

Originally posted by Great Britten View Post

Wow, I had no idea.

So if I'd signed up for a 6 month contract and opted into salary sacrifice, I wouldn't have been able to have opted out throughout the duration of the contract even if I'd switched brollies. Food for thought to DYOR I guess. But thanks, anyway. I had no idea it was that inflexible.

It's worth looking at the complexity shown in EIM42785 - Employment Income Manual - HMRC internal manual - GOV.UK (www.gov.uk)
and EIM42786 - Employment Income Manual - HMRC internal manual - GOV.UK (www.gov.uk) (which doesn't work)
so you can see the tightrope the umbrella firm needs to walk along.

Personally I would argue that a renewal meets the criteria required to allow salary sacrifice to be changed but if the umbrella firm is being difficult the easiest solution would be to change umbrella company.

More Orange Genie / Salary Sacrifice Woes