What is optional remuneration arrangements?
Answered 17 March 2026
Here is a comprehensive explanation of Optional Remuneration Arrangements (OpRA):
What the law says
Optional Remuneration Arrangements (OpRA) are defined in section 69A of ITEPA 2003 for the purposes of the benefits code. A benefit provided for an employee is provided under "optional remuneration arrangements" so far as it is provided under arrangements of Type A or Type B, regardless of whether those arrangements are made before or after the beginning of the person's employment.
Type A Arrangements
"Type A arrangements" are arrangements under which, in return for the benefit, the employee gives up the right (or a future right) to receive an amount of earnings within Chapter 1 of Part 3 of ITEPA 2003. This is the classic salary sacrifice model.
Type B Arrangements
"Type B arrangements" are arrangements (other than Type A) under which the employee agrees to be provided with the benefit rather than an amount of earnings within Chapter 1 of Part 3 of ITEPA 2003. This covers situations such as flexible benefits packages with a cash option.
Key supplementary rules
- A benefit is treated as provided under OpRA so far as it is just and reasonable to attribute its provision to the arrangements in question.
- The fact that an employee makes good (or is required to make good) any part of the cost of the benefit does not mean the benefit is provided outside of OpRA.
- Where a benefit is provided partly under OpRA and partly otherwise, the benefits code applies with just and reasonable apportionments.
HMRC guidance / practice
From 6 April 2017, the Income Tax and NICs advantages where benefits in kind are provided through OpRA are largely withdrawn. The change was made to redress the advantage these arrangements allowed — employees would pay less Income Tax and NICs compared to what they would have paid if paid entirely in cash.
In practical terms, OpRA covers:
- Salary sacrifice arrangements
- Benefits in kind with a cash allowance option
- Flexible benefits packages with a cash option
For most benefits in kind that were previously subject to a full or limited exemption, the exemption does not apply if the benefit is provided in conjunction with an OpRA. The earnings charge on the benefit in kind is based on the amount of salary given up, if this is greater than the earnings charge that would otherwise arise under the normal benefit-in-kind rules.
Certain benefits are excluded from these changes (see EIM44130), and employer contributions into registered pension schemes and employer-provided pensions advice remain excluded from the April 2017 changes.
HMRC's detailed guidance on OpRA from 6 April 2017 starts at EIM44000.
Summary
| Feature | Detail |
|---|---|
| Legislation | Section 69A ITEPA 2003 (inserted by Finance Act 2017, Schedule 2) |
| Effective date | 6 April 2017 |
| Type A | Employee gives up earnings in return for a benefit (salary sacrifice) |
| Type B | Employee chooses a benefit instead of an earnings option (cash alternative) |
| Effect | Tax/NICs advantages largely removed; charge based on higher of cash foregone or normal benefit value |
Citation sources
From 6 April 2017, the Income Tax and NICs advantages where benefits in kind are provided through arrangements under which the employee gives up the right to an amount of earnings in return for a benefit are largely withdrawn. Guidance on optional remuneration arrangements from 6 April 2017 starts at EIM44000. This change has been made to redress the advantage that use of these arrangements allowed. Employees would pay less Income Tax and NICs compared to what they would have paid if they’d been
Part 3 Employment income: earnings and benefits etc. treated as earnings Chapter 2 Taxable benefits: the benefits code General definitions for benefits code Optional remuneration arrangements 69A 1 Subsections (2) to (7) have effect for the purposes of the benefits code. 2 A benefit provided for an employee is provided under “optional remuneration arrangements” so far as it is provided under arrangements of type A or B (regardless of whether those arrangements are made before or after the beginn
e Tax and NICs advantages where benefits in kind are provided through salary sacrifice arrangements (described in the Finance Act 2017 as “optional remuneration arrangements”) are largely withdrawn. Guidance on optional remuneration arrangements from 6 April 2017 starts at EIM44000. Transitional provisions apply for a limited period. For further details see EIM44030. Certain benefits in kind are excluded from the changes. For further details see EIM44130. Employer contributions into registered p
From 6 April 2017, the Income Tax and NICs advantages where benefits in kind are provided through salary sacrifice arrangements (described in the legislation as ‘optional remuneration arrangements’) are largely withdrawn. For most benefits in kind which were subject to either a full exemption or a limited exemption, the exemption does not apply if the benefit is provided in conjunction with a salary sacrifice arrangement. The earnings charge on the benefit in kind is based on the amount of salar