Waivers of remuneration: overview
Sections 15(2) and 18 ITEPA 2003
A waiver of remuneration happens when an employee gives up rights to remuneration and gets nothing in return.
Where the employee gets a non-cash benefit in return, this is called a salary sacrifice. For guidance on a salary sacrifice see EIM42750 onwards.
The effect of a waiver for income tax purposes depends on its timing.
- If the remuneration waived is given up before it is treated as received for employment income purposes then the remuneration given up will not be taxable earnings.
- If the remuneration waived is given up after it is treated as received for employment income purposes then the employee remains taxable on the remuneration given up.
For more details see EIM42710.