VAT on salary sacrifice

Mark Groom

Mark Groom reviews HMRC’s recent guidance following the decision in AstraZeneca and identifies immediate action points

With effect from 1 January 2012 salary sacrificed by employees in exchange for a benefit will be treated as consideration for that benefit for VAT purposes;
Where the benefit concerned is liable to VAT then subject to normal rules input VAT is recoverable but output tax will be due on the amount of salary sacrificed which is to be treated as consideration;
If the cost of the benefit to the employer is more than the amount of salary sacrificed output VAT will be due on the higher amount; but
Benefits...

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Mark Groom reviews HMRC’s recent guidance following the decision in AstraZeneca and identifies immediate action points

With effect from 1 January 2012 salary sacrificed by employees in exchange for a benefit will be treated as consideration for that benefit for VAT purposes;
Where the benefit concerned is liable to VAT then subject to normal rules input VAT is recoverable but output tax will be due on the amount of salary sacrificed which is to be treated as consideration;
If the cost of the benefit to the employer is more than the amount of salary sacrificed output VAT will be due on the higher amount; but
Benefits...

If you or your firm subscribes to Taxjournal.com, please click the login box below:

If you do not subscribe but are a registered user, please enter your details in the following boxes: