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HMRC internal manual

Employment Income Manual

Salary sacrifice: request to HMRC to approve arrangements before implementation

Section 62 ITEPA 2003

For an explanation of what is a salary sacrifice see EIM42750.

You may get requests for advice:

  • on how to set up a salary sacrifice arrangement, or
  • on whether draft documentation will achieve a successful salary sacrifice.

You should not comment on either of these areas. Salary sacrifice is a matter of employment law, not tax law. The nature of an employee’s contract of employment is a matter for the employer and employee. HMRC’s interest is in determining how the tax and NICs legislation applies to the various elements of the employee’s remuneration package. HMRC only comment on proposed transactions in a limited range of circumstances. These limited circumstances are set out in the booklet “Code of Practice 10 - Information and Advice”. These limited circumstances do not apply in a case of a proposed salary sacrifice.

There is an additional reason why HMRC cannot comment on proposed salary sacrifice arrangements. As a salary sacrifice involves an alteration of the contractual arrangements between employer and employee it would not be appropriate for HMRC to participate in advising how it should be set up. It is possible that the effect of this contractual alteration may subsequently become a matter of dispute between employer and employee. HMRC would not want to be involved in such a dispute by having given advice on its setting up.

Information on salary sacrifice is available to the public on the HMRC website. It can be found amongst ‘publications’ under the heading of ‘specialist’. The web address is In addition guidance in the Employment Income Manual on salary sacrifice is available to the public via the HMRC website. You can direct the enquirer to the relevant parts of this guidance at EIM42750 onwards. The web address is -

See EIM42773 if the employer advises that he has already implemented changes to employment contracts and is seeking approval.