Employment and Payroll Group: salary sacrifice and expenses

18 June 2015

At the last Employment and Payroll Group (EPG) meeting members asked, what happens to salary sacrifice arrangements for expense payments after 6 April 2016?

What happens to salary sacrifice arrangements for expense payments after 6 April 2016?

The expenses exemption that comes into force on 6 April 2016 specifically excludes expenses or benefits provided under a salary sacrifice arrangement or any other arrangement where employees give up the right to receive earnings in return for tax free expenses payments, or where the level of their earnings is dependent upon the amount of any expenses payment.

After 5 April 2016 any expenses payments paid to employees under a salary sacrifice arrangement will need to be paid after deduction of tax and NICs. Employees who have suffered tax on these payments will still be able to claim a deduction from HMRC in the normal manner.

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