HM Revenue & Customs' view of bonus sacrifice schemes
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HM Revenue & Customs (HMRC) permits bonus waiver schemes as long as the following requirements are met:
- Documentation must be in place between you and your employer stating that you are entitled to a lower bonus as a result of the waiver
- The documentation must refer to the pension benefit being given in exchange for the waiver
- Only future remuneration can be sacrificed - this means that your bonus needs to be given up before it is treated as received for income tax and NIC purposes
- HMRC requirements also stipulate that bonus waiver agreements between employee and employer are irrevocable.
HMRC does not require bonus waivers to be reported but it is advisable that copies of the revised contract are kept by you and your employer in case it is required.
 Bonus sacrifice case study |
