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Breaking News March 14th 2018 Childcare scheme gets six-month reprieve

14 Mar 2018

Education Secretary Damian Hinds made the concession during a Commons debate yesterday March 13th.

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VAT and Salary Sacrifice update

HM Revenue and Customs (HMRC) have made plans to issue further guidance on the treatment of salary sacrifice arrangements. HMRC's original announcement about the changes to be introduced from 1 January 2012 follow the ECJ's judgment in the AstraZeneca case about salary sacrificed in return for vouchers.

HMRC indicated that after 1 January 2012, VAT would be due on sums sacrificed under "cycle to work" arrangements and on other salary sacrifice arrangements involving benefits that are subject to VAT, regardless of when the arrangement was put into place. 

It appears that HMRC will shortly confirm that arrangements put into place on or before 27 july (the day before HMRC's announcement of the new policy) will not be caught by the change and that the salary sacrifices under such arrangements will not be subject to VAT even if they occur after 1 January 2012. 

Where appropriate, VAT will be due from 1 January 2012 under salary sacrifice arrangements put into place after 27 July, including "continuation" arrangements (e.g. where employees "opt in" to packages on a regular basis and the "opt-in" occurs after 27 July 2011).

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