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Salary Sacrifice for ATT course

Salary Sacrifice for ATT course for new employee

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I am about to employ an experienced Tax Assistant who is part-way through her ATT exams. We agreed a salary of (say) £25,000 on the grounds that she would self-fund her training and I would pay for her membership and exams. Before starting she has asked for me to pay for an ATT training course (say) £1,200 incl VAT and she will take a salary sacrifice by the equivalent amount over four months. The training will be adding to her existing knowledge. I am VAT registered and will be recovering the VAT element.

Can I reduce her pay by £250 per month for the first four months as a salary sacrifice to recover the net cost

 

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By Accountant A
23rd Aug 2019 12:33

You'd need to speak to an accountant.

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By SteLacca
23rd Aug 2019 13:58

You could, but if there are any other deductions you may need to consider whether or not you will be breaching NMW rules.

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Replying to SteLacca:
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By Tax Dragon
23rd Aug 2019 14:21

NMW? £25k (say)? How many hours is this slave driver expecting her to do?!

I'm just wondering whether there's a (legitimate) tax saving. Just advance the poor kid a loan and save the legals (I assume she wants contractual assurance her pay bumps back up in four months?)

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Replying to Tax Dragon:
By SteLacca
23rd Aug 2019 14:43

25K/12=£2,083 pcm - £250 = £1,758.

Assume 40hr week = 173 pcm

£1,758/173 = £10.16 ph.

NMW = £8.21, which means £1.95 PH headroom, or £337 pcm.

I did say if there are other deductions, and £337 SS per month for something (e.g. Co Car) is not an unreasonable amount.

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By paul.benny
23rd Aug 2019 15:05

I'm not sure that training courses are one of the exemptions that take salary sacrifice out from PAYE/NI.

Why not simply agree in the contract a lower salary that increases after the first 4 months (as per your example).

Funding employee qualifications like this is normally an allowable business expense. Everybody (except HMRC) benefits from reduced NI and the VAT recovery.

Credit to your new employee for spotting a tax planning opportunity.

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Replying to paul.benny:
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By Tax Dragon
23rd Aug 2019 15:45

I'm not going to take offence.

Just... OP, next time you want to take on a trainee, pay to train them and promise them a pay-rise, like normal employers. Don't make them ask for a pay-cut, you know? And don't have (say) £25k all over the paperwork and don't let the revised paperwork on this occasion refer to a reduction in return for paying for the course. You'll give yourself moral dilemmas... at least, you will once your ATT student passes her exams and starts teaching you about tax!

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