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TaxRobin
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Category: Tax
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Experience:  International tax
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Hi I am looking for some advice on NHS childcare vouchers

Resolved Question:

Hi
I am looking for some advice on NHS childcare vouchers and final voluntary redundancy settlement payments
I have been informed by my payroll dept that the final settlement figure does not include the salary sacrifice amount and therefore my figure is about 6-7k lower than expected.
Can someone provide me with any legislation/support on how I can be reassurred that this is correct or are there situations when the sacrifice amount should be included in my reduancy pay. Im keen to ensure I am equipped with the right questions to ask payrol to establish why some organsiations factor the full salary into the settlement figure if the vouchers have been used for less than 3 years
thanks
Emma
Submitted: 2 years ago.
Category: Tax
Expert:  TaxRobin replied 2 years ago.
Hello and thank you for allowing me to assist you.
A salary sacrifice arrangement is an agreement between an employer and an employee to change the terms of the employment contract to reduce the employee's entitlement to cash pay. The calculation for redundancy settlement has always been based on gross earnings subject to Class 1 NICs. In particular the salary sacrifice arrangement does not change the definition of earnings.
Some non-cash benefits (such as childcare vouchers where the excess over a tax and NICs exempt amount is chargeable to tax and Class 1 NICs) would have a portion that is included in redundancy.
If you are taking this matter further with payroll, you would ask them to show if you had any amounts that were chargeable to tax on the vouchers.
Childcare vouchers or other benefits are only included in calculation in so far as they are subject to Class 1 NICs.
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