Does HMRC require an employee to sign up for a salary exchange scheme for a set period of time, or can they opt in and out?
• salary exchange is about varying the employee’s terms and conditions as it relates to remuneration. It is, therefore, a matter for agreement between the employer and employee. HMRC is only concerned that the correct amount of tax and NICs is paid in respect of each element of the remuneration package that the employee receives from the employment. • If the employer allows some ‘opting in and out’, each time there is a change there should be a legally enforceable variation to the employee’s terms and conditions. At any given time it must be clear what the employee is actually entitled to – either cash pay or some other form of remuneration, for example a benefit in kind or non-cash vouchers. The employer must apply the correct tax and NICs treatment to what is actually due to the employee. • If the terms and conditions provide the right to revert to cash within the period of time they are set to cover, any tax exemption may be lost. In the case of Heaton v Bell, the House of Lords dec
Related Questions
- Can an employer require an employee to use more than two weeks of paid time off during the period the employee is claiming Family Leave Insurance benefits?
- Can an employer require an employee to use paid time off during the period the employee is claiming Family Leave Insurance benefits?
- What information does HMRC need to see after a salary exchange scheme is set up?