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salary sacrifice schemes and VAT

7 October 2011

HM Revenue & Customs have recently published some further guidance on how they will implement the VAT impact on salary sacrifice schemes of the European court case of Astra Zeneca. As HMRC previously outlined in their Brief 28/11 in the summer, as of 1 Jan 2012 many employers who operate salary sacrifice schemes may have to start accounting to HMRC for VAT on the value of the non-cash benefits they provide to their employees under those schemes.

In this latest Brief, HMRC have published further guidance on how these VAT changes will affect existing salary sacrifice schemes, and given details on transitional arrangements.

Any employers currently operating salary sacrifice schemes should look at this latest HMRC Brief as soon as possible, to check on how they might be affected by this VAT change coming in on 1 Jan 2012.

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