- Original Poster
- #1
Hi all,
I didn't know which forum to put this in so apologies if in wrong place. An employee has sent me details of a PC World (DSG Group) Employee Benefits scheme advertising 20% or 35% savings (basic/high rate tax payer) realised through salary sacrifice. Any company can sign up. This is a spread the cost type arrangement over through twelve months salary sacrifice and the advert shows all types of tech available from phones, TV's, computers, household appliances etc - essentially anything they sell by the looks of it.
How can this work?
I accept there would be a tax and NI saving each month to the employee and NI saving to the employer through payroll. However, the goods provided to the employee would have to be charged to benefit in kind at 20% of VAT inclusive value each year (of full value if given entirely) therefore negating the tax saving to the employee and NI saving to the employer (in effect tax would be delayed but will become due). As far as I can see, there would be no NI charge to the employee so this would be a saving.
VAT could not be reclaimed because it would not be a business use asset so doesn't come into it.
So how does the logic of advertising up to 20% or 35% savings work? I accept you could buy a laptop or work mobile phone as tax free benefit if conditions are met but outside this am I missing something relating to other items?
I appreciate your thoughts and this has me confused.
Thank you
I didn't know which forum to put this in so apologies if in wrong place. An employee has sent me details of a PC World (DSG Group) Employee Benefits scheme advertising 20% or 35% savings (basic/high rate tax payer) realised through salary sacrifice. Any company can sign up. This is a spread the cost type arrangement over through twelve months salary sacrifice and the advert shows all types of tech available from phones, TV's, computers, household appliances etc - essentially anything they sell by the looks of it.
How can this work?
I accept there would be a tax and NI saving each month to the employee and NI saving to the employer through payroll. However, the goods provided to the employee would have to be charged to benefit in kind at 20% of VAT inclusive value each year (of full value if given entirely) therefore negating the tax saving to the employee and NI saving to the employer (in effect tax would be delayed but will become due). As far as I can see, there would be no NI charge to the employee so this would be a saving.
VAT could not be reclaimed because it would not be a business use asset so doesn't come into it.
So how does the logic of advertising up to 20% or 35% savings work? I accept you could buy a laptop or work mobile phone as tax free benefit if conditions are met but outside this am I missing something relating to other items?
I appreciate your thoughts and this has me confused.
Thank you
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