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Hi everyone,
I need some more help with the Coronavirus Job Retention Scheme and I'm hoping someone has already been through this! My sole trader employs his wife and part of her pay is salary sacrificed to her pension. I've read the following on HMRC's website:
Benefits in Kind and Salary Sacrifice Schemes
The reference salary should not include the cost of non-monetary benefits provided to employees, including taxable Benefits in Kind. Similarly, benefits provided through salary sacrifice schemes (including pension contributions) that reduce an employee’s taxable pay should also not be included in the reference salary.
All the grant received to cover an employee’s subsidised furlough pay must be paid to them in the form of money. No part of the grant should be netted off to pay for the provision of benefits or a salary sacrifice scheme.
Where the employer provides benefits to furloughed employees, including through a salary sacrifice scheme, these benefits should be in addition to the wages that must be paid under the terms of the Job Retention Scheme.
Normally, an employee cannot switch freely out of a salary sacrifice scheme unless there is a life event. HMRC agrees that COVID-19 counts as a life event that could warrant changes to salary sacrifice arrangements, if the relevant employment contract is updated accordingly.
My sole trader and his wife would like to stop the salary sacrifice and add it back to her monthly wage, and then claim 80% of this higher amount. However I believe this part of her wage would not claimable under the CJRS. Is this correct?
The employee (wife) is entitiled to stop the salary sacrifice but the employer (my sole trader) would be liable to pay it out of his own pocket. They are trying to reduce their outgoings as the business is closed completely. Could they agree a reduction in wages by this salary sacrifice amount?
Have I got this right?
Thanks
Clair
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