Salary Sacrifice

[shooter782]

Hi Forum

Where an employer allows an employee to purchase additional holidays by deducting an amount monthly from their salary, is the amount deducted subject to VAT? i.e. is the employer providing the employee with a right not to work for a day and thereby subject to VAT?

Thanks

[pawncob]

Wages are outside the scope of VAT

[Generix]

Hi Forum

Where an employer allows an employee to purchase additional holidays by deducting an amount monthly from their salary, is the amount deducted subject to VAT? i.e. is the employer providing the employee with a right not to work for a day and thereby subject to VAT?

Thanks

At present, HMRC are not challenging this as 'salary sacrifice'....mainly because there is no input VAT associated with it, and its quite easy to argue that its the same as unpaid leave albeit agreed in advance and the cost spread....