HMRC's view of bonus sacrifice schemes
HM Revenue & Customs (HMRC) permits bonus waiver schemes as long as the following requirements are met:
- Documentation between you and your employer states 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 due to be paid to you.
- The bonus waiver agreements between employee and employer are irrevocable.
HMRC does not require bonus waivers to be reported but it is advisable that you and your employer keep copies of the revised contract.