Childcare Vouchers

[EBJ]

I have just completed AAT Technician but need some advice on payroll if anyone can help! We are a small organisation with one employee who has elected for the salary sacrifice for childcare vouchers. Can anyone tell me if pension contributions should be calculated on the new reduced gross pay or the original prior to salary sacrifice?

[GILL]

Never come across this one before but would say that as pension contributions are calculated on 'earned' income and the employee has elected to sacrifice some salary, and therefore not pay tax or ni, then pension should be calculated on the reduced amount.

[EBJ]

Thanks for that, I am getting conflicting reports, the accountant thinks it should be on the full amount and the financial advisor thinks it should be on the reduced amount.