Aon Employee Benefits, the UK health and benefits business of Aon plc (NYSE: AON), has said that employers who were hoping for a reprieve from the changes to Optional Remuneration Arrangements (OPRA) will be disappointed and must take action to comply. The Finance Bill 2017 has now received Royal Assent, making it the Finance Act 2017 and while many original clauses were cut, the OPRA elements have remained largely intact. Aon warned in March that the measures, which came into effect on 6 April, could create significant and costly changes for employers.

OPRA is the new term for salary sacrifice and with this change comes the concept of Type A and Type B arrangements.

Aon says that organisations need to be aware of the remaining difference in treatment for life assurance provided on a registered and excepted basis, the taxation changes for group income protection, excepted group life assurance and employee health screenings provided via Type A or Type B OPRA arrangements, as well as the changes to the taxation of mobile phones and home technology, among others.

Polls from an Aon briefing in March and a webinar in April showed that 40% of employers are adopting the short term stance of locking down flexible benefit choices until next renewal; 25% are capturing the changes via P11D and dealing with offline communications; 5% will absorb the HMRC debt at the end of the year, and another 5% are bringing forward the tax charge. Just 25% are catering for changes.

Jeff Fox, principal of Aon Employee Benefits, said:

“The Finance Bill 2017 underwent significant changes as a result of the snap election, and many of the proposed measures were cut, resulting in a much shorter Bill. However, the Bill is now legislation and the changes offer little reprieve around OPRA. It means we still have work to do.”

“Polls run at Aon’s briefing in March showed that the majority of employers are locking down the ability for flex choices to be made (by new or existing employees) until the next renewal date. This means, while they’ve taken action in the short term, they need to decide whether the tax changes affect their long-term strategy and if so, how.”

Jeff Fox continued:

“We urge employers to review their employee benefits schemes without delay if they have not done so already. For those considering the grandfathering option, we would remind employers that it is fragile, and is at best a short-term option.”