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Is salary sacrifice consideration for a supply?

±á²Ñ¸é°ä’s guidance is clear that when deductions are made from salary for goods or services provided by an employer to their employees, they are liable for VAT. This is on the basis that the remuneration given up or sacrificed by the employee is consideration for the supply of taxable benefits supplied in return (assuming those benefits are taxable).

HMRC position is particularly influenced by a European case in which the CJEU was asked to consider an arrangement under which employees could opt to take part of their salaries in the form of retail vouchers. The Court found that the employees’ salary sacrifice was consideration for the supply of the retail vouchers.

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