Setting up a salary sacrifice arrangement

Produced by Tolley in association with

Employment Tax

Guidance

The key technical points to consider when setting up a salary sacrifice arrangement are considered in the Salary sacrifice arrangements ― overview, Salary sacrifice and national minimum wage, Optional remuneration arrangements, and Salary sacrifice and pensions guidance notes. Set out below are the practical considerations in respect of implementation of the arrangement.

Experience suggests that employers often have a launch date already pencilled in, but if this has not been done it would be sensible to examine when this is practical. In working towards this deadline, employers may wish to consider this typical timetable which can be adapted as required.

Stage one: Disclosure of Tax Avoidance Scheme (DOTAS)

As salary sacrifice schemes may fall within the DOTAS rules, once the design of the scheme is fixed, the employer should seek advice on whether the scheme is notifiable under DOTAS. If it is, a DOTAS disclosure to HMRC has to be made within tight time limits. The timing requirements and consequences for non-compliance are explained in more detail in HMRC guidance and in Simon’s Taxes

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Robert Woodward

Employment Tax Manager at Frank Hirth plc

Robert is an expert in UK employment tax matters for employers with UK based employees, including UK employees working overseas, and overseas employees coming to the UK. He has extensive experience of advising clients with regards to PAYE matters, employee benefits and social security as well as employment related payments outside the payroll functions such as termination settlements and payments to consultants and other non-payroll labour. After graduating in Politics and Law from the University of Southampton, Robert started his tax career at HMRC as an employer compliance officer undertaking enquiries into employers' expenses and benefits systems before moving into a large international practice and then into the Big 4. Here he assisted with tax investigations, flexible benefits planning, employment tax compliance and international social security. Robert has presented to various audiences and has had a number of articles published in various magazines on employment tax matters. Robert is a fully qualified member of both the Association of Taxation Technicians (ATT) and the Chartered Institute of Taxation (CTA).

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