If an employee chooses to buy extra days, the salary adjustment takes the form of a salary sacrifice - so the employee will pay the cost monthly. The money comes out of their gross pay. On the other hand, if an employee sells days, the value is added to their gross salary, and tax and NI is payable in the usual way.
Holiday Trading - Deductions (for UK Only) FAQ - Is Holiday Trading a Gross or Net Deduction?
