Glossary · UK
What is Optional Remuneration Arrangement (OpRA)?
Post-2017 rules restricting tax advantages where employees can choose between a benefit or cash.
Full Definition
An Optional Remuneration Arrangement (OpRA) arises where an employee can choose between a taxable benefit and an amount of cash earnings. From 6 April 2017, HMRC restricted the tax and NI advantages that had previously been available through certain salary sacrifice arrangements by introducing the OpRA rules. Under OpRA, the taxable value of a benefit-in-kind provided via salary sacrifice (or a flexible benefit arrangement with a cash alternative) is the higher of the normal cash-equivalent benefit value and the amount of salary foregone. This means that for most benefits, the tax saving from salary sacrifice is eliminated. There are important exceptions: benefits that retain their pre-2017 tax advantages regardless of OpRA include pension contributions, employer-provided pensions advice (up to £500), childcare vouchers (for those already in the scheme before October 2018), workplace nurseries, cycle to work schemes, and ultra-low emission vehicles (electric cars). The OpRA rules apply equally for Class 1A NI purposes. Employers should review flex-benefit arrangements to ensure correct treatment under OpRA. Grandfathering provisions protected certain arrangements until April 2021.