HMRC document suggests that VAT should be payable if the salary sacrifice is being used for items such as bicycles or computers. It does not affect child care vouchers:
Possible Solution 1
Create a second payroll code and have it based on the original payroll code multiplied by 0.2.
- Potential problem in that in most circumstances, the user will not know the total to be paid and will have to work things out backwards.
Possible Solution 2
Put the total payment against the original salary sacrifice code and use the General Ledger split process to put 83.33 to one code and 16.67 to another.
The VAT amounts could then be seen in a discrete account in the General Ledger and will also be reportable within the payroll.