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Where Taxpayers and Advisers Meet

Salary Sacrifice and Tax

wilkesy
Posts:3
Joined:Mon Jun 05, 2023 3:55 pm
Salary Sacrifice and Tax

Postby wilkesy » Mon Jun 05, 2023 4:00 pm

HI,

I am currently looking at a possible salary sacrifice with my employer but they and their accountants are a little confused about what is and isn't taxable, so I thought i would ask here.

I am looking to sacrifice some of my salary to be paid directly to my daughter's school by my employer. Following the advice on the gov website, this would be my employer paying direct but the contract is between me (employee) and the school. This reduces the PAYE payment with NIC still payable.

Does this sacrificed value need to be declared to HMRC? P11D form?

Will I still be liable for tax on this amount paid direct?

Any help is appreciated.

Thanks

Paul

darthblingbling
Posts:699
Joined:Wed Aug 02, 2017 9:09 pm

Re: Salary Sacrifice and Tax

Postby darthblingbling » Tue Jun 06, 2023 12:20 pm

Assuming the fee to the school matches your sacrifice to the penny, the fee paid by the employer will be deemed a benefit in kind through your p11d and you'll be subject to tax on at your marginal tax rate, so zero difference ultimately for tax

If the contract for the school is between yourself and the school with the employer making the payment direct, then this is still treated as earnings for NIC so Class 1 NIC is still due.

Ultimately the net take home effect will be nil.

If the contract is between the employer and school then no Class 1, but the employer will be subject to Class 1A, so potential NIC saving. But in practice I don't know if it's practical to arrange such a contract in this way.

bd6759
Posts:4267
Joined:Sat Feb 01, 2014 3:26 pm

Re: Salary Sacrifice and Tax

Postby bd6759 » Tue Jun 06, 2023 12:23 pm

There is no advantage sacrificing salary for school fees. The amount paid is taxable, reported in P11D. Nic is also payable on that amount.

wilkesy
Posts:3
Joined:Mon Jun 05, 2023 3:55 pm

Re: Salary Sacrifice and Tax

Postby wilkesy » Wed Jun 07, 2023 12:12 pm

Appreciate the feedback from you, thanks.

Looks like i cant use this salary sacrifice option to help.

Cheers

Paul


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