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For VAT purposes, "salary sacrifice" has had a very narrow and specific meaning. It describes an arrangement where an employee opts to receive services and forgoes part of their salary in return. The employee enters into a new employment contract or has their existing contract amended to reflect the new arrangement which they are tied into.
In relation to such schemes, HMRC have previously accepted that the reduction in the salary did not constitute consideration for the benefits received and output tax was not due. Employers were able to recover the related VAT as input tax, subject to the normal rules.
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Recent Changes: NA
Install Support: No Install Support
Supported Languages: English
Additional Requirements: Windows
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