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Salary sacrifice arrangements for expenses

13 January 2025
Issue: 4968 / Categories: Tax cases
The Best Connection Group Ltd (TC9377)

The employer set up a salary sacrifice arrangement under which it paid travel and subsistent expenses tax free to employees. A dispute arose as to the PAYE and National Insurance treatment of the expenses. The taxpayer considered that it did not have to account for tax or National Insurance on payments for mileage undertaken by the participants in going to and from their temporary places of work by car motorcycle or bicycle expenses incurred by the participants in commuting by public transport and expenses incurred by the participants on food and drink while they were away from home in the course of their employment.

HMRC disagreed and assessed the taxpayer to tax and National Insurance on the payments.

The First-tier Tribunal found largely in favour of HMRC although it accepted that the salary sacrifice was a valid and binding contractual term. It agreed with HMRC that the...

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