Looking at a non-shareholding director who wishes to make a salary sacrifice for 2 years to pay for an MBA and I am trying to clarify the tax (PAYE/CT/VAT) position. While on the face of it, this seems acceptable - the employee accepts a reduced salary and the employer pays for the training. The training is allowable for CT.
However, when researching the topic on the HMRC website (http://www.hmrc.gov.uk/specialist/salary_sacrifice.pdf), it states that 'A salary sacrifice is not effective if, in practice, the arrangement enables the employee to continue to be entitled to the higher level of cash remuneration. In other words he has merely asked the employer to apply part of that cash remuneration on his behalf.' Does an amendment to the contract of employment overcome this objection and would such an amendment be weakened if there is a time element ie. salary reverts after 2 years ?
Thank you in advance for your help.