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Optional Remuneration Arrangements

November 2017

The Finance Bill introduces legislation designed to remove the Income Tax benefits of Optional Remuneration Arrangements (OpRA). The HMRC announcement says that:
Optional Remuneration Arrangements For the purposes of the benefits code, a benefit is provided under an optional remuneration arrangement if it is provided under an arrangement of either type A or type B:

type A arrangements are arrangements under which the employee gives up the right, or the future right, to receive an amount of earnings (for example salary) which would be chargeable to tax under Section 62 ITEPA 2003 in return for the benefit
type B arrangements are arrangements, other than type A arrangements under which the employee agrees to be provided with a benefit rather than an amount of earnings (for example the option of a cash allowance) Where a benefit is chosen instead of some form of cash pay, the taxable value of the benefit is the greater of the amount of cash pay given up and the taxable value under the normal benefit in kind rules. Where the two are the same, then apply the normal benefit valuation rules.

A benefit provided under an optional remuneration arrangement includes any benefit or facility, regardless of its form and the manner in which it is provided.
Transitional provisions apply for a limited period and certain benefits are excluded from this change.



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The Finance Bill introduces legislation designed to remove the Income Tax benefits of Optional Remuneration Arrangements (OpRA)