Salary Sacrifice: May no longer be attractive for employers

Personnel Today has reported that a European court ruling means employers may be forced to pay millions in unpaid VAT for salary sacrifice voucher schemes.

For a number of years now the Government have offered a number of schemes to encourage employers to provide employees with tax advantageous benefits. Some of the most common include: Child care vouchers, bikes for work, pension contributions and retail vouchers.

Employers use salary sacrifice as part of their total reward package for employees and it helps with attraction and retention of staff.

Today, it appears that employers may now be liable for up to four years worth of VAT on the value of retail vouchers.

Does your company offer vouchers under a salary sacrifice scheme?
What would it cost your business if you do become liable for four years worth of VAT on this value?
What would the impact be on your business?

At DOHR we work with employers to introduce cost effective benefits schemes which incentivise employees and save the company some money. We’ll be watching this space with interest.