The incentive for employers to provide salary sacrifice schemes is to be removed from April 2017.
Many employee benefits professionals agree that the schemes - which allow employees to forgo a part of their salary in return for certain work benefits - have been abused, especially with regard to the purchase of luxury goods, like mobile phones and life insurance products.
Employers will need to start considering an alternative system of benefits, especially where employee well-being is affected, to ensure that engagement remains high.
The main issues for employers will be having time to change employee contracts, and considering which benefits to continue if they become unattractive to their staff.
Although it doesn't effect pension contributions, childcare costs or bikes, other welfare issues are impacted, like gym membership and healthcare products. Employers need to revisit the nature of employee and workplace benefits to achieve a balance between cost and employee motivation, morale and well-being.
Millions of workers will lose tax perks attached to employee benefits including health checks, gym memberships and mobile phone contracts. As disclosed this week by the Sunday Telegraph Philip Hammond says he will tighten rules that allow workers to forgo part of their salary in return for certain work benefits. He said this "salary sacrifice" system is "unfair", and so from April 2017 the tax benefits of using these schemes will be scrapped.