Salary sacrifice

Salary sacrifice is a contractual arrangement whereby an employee gives up the right to receive part of their cash remuneration, usually in return for their employer’s agreement to provide some form of non-cash benefit.

Follow the links below for guidance on a wide range of questions relating to salary sacrifice – from both the employee’s and the employer’s perspectives.

Salary sacrifice and canteen arrangements (PDF 24K)

Information for employers about salary sacrifice arrangements and canteen arrangements: interaction between new rules from 6 April 2011 and HM Revenue & Customs existing technical challenges to these arrangements.

Salary sacrifice (PDF 61K)

An overview of salary sacrifice arrangements, including HM Revenue & Customs (HMRC’s) role in assessing schemes once they’ve been set up.

Salary sacrifice: further general information

Revised guidance for employers that builds on the salary sacrifice information contained in the overview PDF above.

Salary sacrifice and non-cash benefits during statutory maternity leave (PDF 133K)

Guidance on how salary sacrifice affects Statutory Maternity Pay and on the non-cash benefits employers must provide during statutory maternity leave.

Non-cash benefits during statutory maternity or adoption leave: tax and National Insurance contributions (PDF 55K)

Information for employers on a number of tax and National Insurance contributions issues that can arise if non-cash benefits but no cash earnings are provided to an employee.

Childcare vouchers and tax credits - better off calculator

A calculator to help you decide whether it's more efficient to use tax credits or employer childcare vouchers to cover childcare costs.

Salary sacrifice arrangements involving cycles and bus passes (PDF 31K)

Information for employers on the underlying conditions applying to enable provision of cycles and bus passes to qualify for exemption. How HMRC will deal with arrangement which didn't meet all the conditions.