Save, make, understand money

Household Bills

The work perk changes you need to know about

Paloma Kubiak
Written By:
Paloma Kubiak

In April a number of policy changes take effect which could see your work perks and pay alter. Here are three you need to be aware of.

Salary sacrifice

In last year’s Autumn Statement, chancellor Philip Hammond announced a clampdown on some salary sacrifice schemes which take effect from April 2017. Salary sacrifice schemes are when employees get a lower salary in return for a benefit or perk such as a mobile phone, company car or car parking space. As a result, the employee pays less income tax and both worker and employer pay less national insurance.

The chancellor said such arrangements will now only benefit from a saving on employee national insurance, with the tax and employer national insurance benefits being taken away.

Pension contributions, childcare, cycle to work schemes and ultra-low car emissions will be exempt from the rule changes while arrangements for cars, accommodation and school fees will be protected until April 2021.

Jonathan Watts-Lay, director of financial education in the workplace provider at WEALTH at work, said, “Life insurance, mobile phones, cars, parking and medical insurance are just some of the benefits which from April, will no longer be available through salary sacrifice. Individuals will have to understand how these changes affect them as their costs will be higher for these benefits in the future.”


The tax-free Childcare scheme is due to be rolled out early this year. It will be available online and means for every 80p paid in, the government will add 20p. The maximum State contribution per year will be £2,000 per child (or £4,000 for disabled children). Parents must be in work to qualify and earning just over £100 per week, but no more than £100,000 per year. It’s available for children up to the age of 12 and can also be used by self-employed parents.

Parents who are already members of the current Child Care Voucher system can continue in it, providing their employer will still provide access to it; new members will also have the opportunity to join the current scheme up until April 2018.

Watts-Lay said: “Whether you are better off with the old or new scheme depends on how much you earn, how much you spend on qualifying childcare and how old your children are. There will be no NI saving under the new system, therefore employed parents with lower childcare costs could be worse off. However, it is available to everyone, so is good news for those who work for companies that don’t offer the voucher system and the self-employed.”

Minimum wage

The National Living Wage (NLW) is to increase by 4.2% from £7.20 to £7.50 an hour from April 2017 for working people aged 25 and over. As part of Hammond’s Autumn Statement last year, he said the move will mean a pay rise worth £500 a year for full-time workers.

The National Living Wage is different to the National Minimum Wage, which applies to those under the age of 25.

For those aged 21 to 24, wages will rise from £6.95 to £7.05. For 18 to 20-year-olds, there’ll be a 5p increase to £5.60. Under 18s will receive £4.05 per hour from April.