Salary sacrifice for cycles and bus passes
It seems that some salary sacrifice arrangements involving cycles and bus passes do not fully satisfy the rules. Where the relevant conditions are satisfied the benefit of the cycles and bus passes are tax free. Associated rules mean that there is no employer liability to National Insurance Contributions (NICs) in respect of the salary sacrifice arrangements.
HMRC have now explained their approach to past and current periods where the conditions necessary for the tax benefits have not been met.
In certain cases HMRC will allow employers to retain the tax benefits for earlier arrangements whilst at the same time ensuring stricter compliance with the rules for arrangements entered into after 18 December 2009.