UK: Is a Salary Sacrifice Scheme Amount to a Taxable Supply - Pertemps Case

27 August 2019
Vat News Uk


The Upper Tribunal (UT) recently decided on whether the operation of salary sacrifice scheme to provide travel and subsistence payments to employees. The facts of the case are as follows: the employees of Pertemps Ltd. were offered the option of participating in Pertemp’s scheme whereby their subsistence and travel expenses were paid by the employer but in turn their salary was reduced by the value of the expenses.

To defray the costs of running the scheme, Pertemp charged a fee. The issue before the court was whether the charge for using the scheme was taxable. The UT ruled that the provision of the scheme by Pertemps to its employees did not amount to an economic activity as it arose within the context of the employment relationship.

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