CHANGES TO SALARY SACRIFICE RULES

Previously, cars obtained via salary sacrifice schemes were taxed on the Benefit-in-Kind (BiK) value of the vehicle.

From April 6 2017, employees using a salary sacrifice scheme will now pay tax on either the Benefit-in-Kind value of the vehicle or the cash value of the salary sacrifice – whichever has the highest taxable value.

Ultra-Low Emission Vehicles (ULEVs) emitting less than 75g/km of CO₂ will be exempt from these tax changes.

The new rules apply to any employee who ordered a new car with CO₂ emissions over 75g/km on or after 6 April 2017.

If you ordered a new car before 6 April 2017, the rules remain unchanged until 5 April 2021.

Drivers who select a car with low CO₂ emissions and P11D value may no longer benefit from a reduced tax bill. They may be taxed instead on the cash value of the salary sacrificed if this is the higher figure.
 

Click here to use our BiK calculator, which now shows the tax payable being the greater of the benefit-in-kind on the car or the tax on the amount of salary sacrificed.