Victims of wages or bonuses, sometimes referred to as „wage swaps”, imply that a worker agrees to change their working and employment conditions in terms of remuneration. Under his revised contract, the worker waives part of his salary or contractual bonus in return for a benefit in kind from the employer, for example an employer pension contribution. NI limit values are set by the UK Government and adapted to the UK`s higher tax threshold. But the higher tax limit in Scotland is £43,430 compared to £50,000 in England. This means that in 2020/21, Scottish taxpayers will effectively be taxed at 53% (41% of income tax plus 12% NI) on revenues between £43,430 and £50,000 (compared to 32% for their UK counterpart). The use of wage victims for these revenues is a way to immediately benefit from the effects of larger tax breaks and NI savings. It is not necessary to say that any compensation or bonus sacrifice agreements have been concluded. There is also no obligation to comply with the agreement for at least 12 months, as has been the case. But in practice, many employers are asking HMRC for comment to ensure that their agreements have been properly implemented and that they take into account the right level of income tax and NI.
Please note that the victim must not reduce the wage below the national minimum wage. Employers are not required to offer wages to workers. People considered self-employed cannot use a salary victim for their own benefit, but of course offer it to their employees. There may also be inconveniences for the employer. The letter requires the employee to sign and return the letter to show their understanding and acceptance of the letter setting out the victim`s conditions. There can sometimes be inconveniences for employees who enter into a wage sacrifice agreement. For example: Consequences of invalid sacrifice agreements If HMRC decides that a sacrifice agreement is not valid, it treats the sacrificed amount as if it had been paid to the worker, i.e. it is taxable and is subject to the employer and the NI worker. When an exchange agreement is entered into to finance the pension of another person (e.g. .B.
of the worker`s spouse), the amount exchanged continues to be treated as the worker`s income. . . .