PSI4.1.14 - General: Salary Sacrifice

(This archived guidance relates to HMRC discretionary practice before the 6th April 2006. For current guidance on Registered Pension Schemes see the Registered Pension Schemes Manual)

[Pn4.9]

An employee may also give up entitlement to part of his or her remuneration on the understanding that the employer will pay a corresponding amount as a contribution to the scheme for the employee's benefit. This is commonly referred to as a "salary sacrifice" arrangement but it may be bonus or commission which is given up. If executed properly, the employee's remuneration for Schedule E purposes is effectively reduced and the contribution to the scheme is an employer contribution. These arrangements are the sole responsibility of the Inspector of Taxes (see PSI22.4.31).

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