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UK: Output VAT Due on Salary Sacrifice Schemes Beginning January 1, 2012

Effective January 1, 2012, when an employee in the United Kingdom opts to forgo salary to receive goods or services from his or her employer (a ?Ç£salary sacrifice scheme?Ç¥), the employer must account for output on value-added tax (VAT) on these goods and services if the arrangement constitutes a salary sacrifice scheme for VAT purposes. Prior to this change, HM Revenue & Customs had accepted that the reduction in salary under a salary sacrifice scheme did not constitute consideration for the benefits received and output tax was not due. This change is explained in Revenue & Customs Brief 28/11, which is available?áhere.

The lawyers of our Employee Benefits and Executive Compensation Practice Group are readily able to assist companies on a nationwide basis with implementing sophisticated benefit plans and providing answers to their most challenging compensation issues. Additionally, our lawyers are well aware of the daily employee benefits challenges facing companies of all sizes and are capable of helping in-house lawyers and human resources personnel with the day-to-day advice and guidance necessary to properly administer employee benefits plans.

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