Statutory Maternity Leave, salary sacrifice and non-cash benefits

Salary sacrifice is a change to an employee’s contractual pay entitlement. It often involves the giving up of some entitlement to pay in return for some other form of benefit, such as employer pension contributions or childcare vouchers. Depending on the sort of benefit involved, tax and/or National Insurance savings can often result for both the employer and employee.

Following changes in the law in 2008 on what benefits employers must provide to employees during Additional Maternity Leave, HMRC published guidance on Statutory Maternity Leave and salary sacrifice. Similar changes took place in respect of employees on adoption leave. In the recent HMRC Employer Bulletin they provided a link to the guidance.

The guidance also covers what non-cash benefits should be provided to employees during Statutory Maternity Leave.

HMRC have confirmed, following requests from employers, that they plan to publish further guidance on their website, including the tax and NICs implications of providing non-cash benefits, in-year recording and end of year reporting of these complex areas.

If you would like to discuss these issues in more detail or the opportunities afforded by salary sacrifice more generally, please do get in touch.

Internet link: HMRC guidance on salary sacrifice

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