VAT and salary sacrifice arrangements

After a long period of uncertainty, HMRC have issued their long awaited guidance on the VAT status of supplies made to employees under arrangements which qualify as salary sacrifice schemes. Output tax must be accounted for on the supplies where they are subject to VAT.

Revenue & Customs Brief 28/11  provides details of the VAT implications affecting particular circumstances including the cycle to work scheme, face value vouchers, childcare vouchers and motor cars. The link to the Brief is provided below:

 http://www.hmrc.gov.uk/briefs/vat/brief2811.htm 

Employers will be required to charge VAT to employees with effect from 1 January 2012 where the supplies are subject to VAT.

Please contact Vaughn Chown on 020 7182 4748 or via email on vaughn.chown@gabelletax.com to discuss the VAT implications and implementation of the appropriate VAT accounting.