HM Revenue and Customs (HMRC) publishes guidance on the tax treatment of salary sacrifice arrangements, including the optional remuneration arrangements rules in the Income Tax (Earnings and Pensions) Act 2003.

Where arrangements are marketed as providing tax and National Insurance advantages, including those sometimes referred to as “grocery salary sacrifice schemes”, the tax treatment depends on the facts of each case and whether the statutory conditions are met. Where they are not, tax and National Insurance will apply in the usual way.

HMRC has taken steps to ensure employers understand how the rules apply by communicating the correct treatment through published guidance and customer channels. This includes an article published in the December 2025 Employer Bulletin, which clarifies the application of the optional remuneration arrangements rules to these types of schemes.

HMRC keeps the tax system under review and will consider whether further communication is required.

The Cabinet Office does not hold information about what salary sacrifice schemes government departments offer.

HMRC’s financial wellbeing offer for its workforce, aligned to the Civil Service Financial Strategy, includes access to a variety of advances including rental deposits and season ticket loans, as well as debt/budgeting advice and support through its Employee Assistance Programme.

HMRC has no current plans to introduce payroll deduction arrangements, to enable its employees to join a Credit Union. It does not hold the role of policy lead for payroll deduction schemes across government, and decisions on the merits of payroll deduction arrangements would be a matter for the relevant departments.

HMRC’s financial wellbeing offer for its workforce, aligned to the Civil Service Financial Strategy, includes access to a variety of advances including rental deposits and season ticket loans, as well as debt/budgeting advice and support through its Employee Assistance Programme.

HMRC has no current plans to introduce payroll deduction arrangements, to enable its employees to join a Credit Union. It does not hold the role of policy lead for payroll deduction schemes across government, and decisions on the merits of payroll deduction arrangements would be a matter for the relevant departments.

The department does not hold this information.

The Department does not hold this information. Local employers across the National Health Service are best placed to understand their staff’s needs and circumstances. NHS staff have access to a range of support for financial wellbeing, including credit union membership.

NHS Employers have published information to support NHS trusts on salary sacrifice arrangements and tax-free childcare, with further information available at the following link:

https://www.nhsemployers.org/articles/salary-sacrifice-schemes

Local authorities are independent employers responsible for the management of their own workforces, including setting their own terms and conditions and employment packages.

Local authorities are independent employers responsible for the management of their own workforces including setting their own terms and conditions and employment packages in compliance with all relevant employment legislation.

The Government recognises that businesses across the economy face lower demand due to the impact of Covid-19.

The Government has announced unprecedented support for businesses during the pandemic, for which payroll giving organisations are eligible. Measures introduced by the government include VAT relief and loan guarantee schemes. The application deadline for the loan guarantee schemes – Bounce Back Loan Scheme, Coronavirus Business Interruption Loan Scheme and Coronavirus Large Business Interruption Loan Scheme – has been extended to the end of January 2021.

Payroll giving organisations can benefit from the recent extension to the Coronavirus Job Retention Scheme until the end of March 2021. Furloughed employees will receive 80% of their current salary for hours not worked.

The Government recognises the vital role credit unions play in the financial wellbeing of their communities, providing an ethical home for their members’ savings, and affordable loans to those who may otherwise have to resort to high-cost lenders.

The Chancellor announced at Budget earlier this year that the Government intends to bring forward changes to the Credit Unions Act to allow credit unions to offer a wider range of products and services. This will be done at a future legislative opportunity. The Government is carefully considering options before bringing forward legislation to ensure that we are delivering reforms which meet members’ needs and support the development of the credit union sector.

Fair4All Finance, the independent body set up to distribute dormant assets funding to support financial inclusion, has set up a £5 million resilience fund to support credit unions and community development finance institutions in England through the coronavirus pandemic. Fair4All Finance has also launched its Affordable Credit Scale-up Programme, designed to provide tailored support to sustainably scale affordable credit.

The Government has no plans to require large employers to offer payroll deductions to allow employees to join and save with a credit union.

In Budget 2018, the Government announced a prize-linked savings pilot called PrizeSaver. This is currently operating in 15 credit unions across the country, helping to support the sector through increased membership, awareness and deposits, as well as encouraging participants to build up savings to help them cope with financial shocks. The pilot is scheduled to end in March 2021. The Government has no plans to allow credit unions to offer Premium Bonds or other National Savings and Investments products.

Credit unions play a vital role in the financial wellbeing of their communities, providing an ethical home for their members’ savings, and affordable loans to those who may otherwise have to resort to high-cost lenders. The Government is committed to seeing a strong and resilient credit union sector. That is why the Chancellor announced at Budget 2020 that the Government will bring forward legislation to enable credit unions to offer a wider range of products and services.

The Parliamentary Under-Secretary of State for Wales and I have frequent discussions with the Welsh Government and other UK Government Departments on a wide range of issues, including how best to support households with the cost of living.

I can confirm the department currently does not have the facility to allow staff to join a credit union through payroll deductions. Staff can still make arrangements to contribute to a credit union via direct debit.

The Foreign & Commonwealth Office does not have a facility to allow staff to join a credit union through payroll deductions, however staff can still make arrangements to contribute to a credit union via direct debit.

Financial wellbeing is a key part of pay and benefits package, and we offer a range of services to help staff build financial capability so they can make informed decisions about their finances.

DFID will assess the potential merits of enabling departmental staff to contribute to a credit union through payroll if at any time we receive a request from our employees to provide such a facility. DFID can find no record of a request being made.

Defra does not currently have the facility for employees to join a credit union through payroll deductions. Staff can make arrangements to contribute to a credit union via direct debit.

Defra is currently investigating options for enhancing Employee Financial Wellbeing as part of a cross Civil Service pilot. Once the pilot is complete, my department will be considering options for our staff, including the possibility of credit unions.

The Department for Business, Energy and Industrial Strategy does not currently have the facility to allow staff to join a credit union through payroll deductions. Staff can still make arrangements to contribute to a credit union via direct debit.

The Department is aware that other public sector organisations offer this facility. The Department is looking to continually develop the offer to staff in terms of financial wellbeing, and acknowledge that this could be an option in the future.

If the Department were to pursue this option, then a full and fair procurement exercise would be carried out in line with central guidance.

The Ministry of Justice does not have the facility to allow staff to join a credit union through payroll deductions. Staff can still make arrangements to contribute to a credit union via direct debit.

Although the Ministry does not currently offer such facility, we continue to explore options to support staff with financial wellbeing.

I can confirm my department currently does not have the facility to allow staff to join a credit union through payroll deductions. Staff can still make arrangements to contribute to a credit union via direct debit. The department does offer employees a wide range of benefits which are paid for through deductions from payroll.

Access to credit unions through payroll is something that has been explored and for which we plan further work to be undertaken in the future to assess if this will be implemented.

The department does not have the facility to allow staff to join a credit union through payroll deductions. This is because our employees have access to many other means of support including: arrangements to contribute to a credit union via direct debit; the opportunity to request salary advances; season ticket loans; and a tenancy rental deposit scheme. The department also encourages staff to make use of the Employee Assistance Programme to access support and advice on financial management where required.