Salary sacrifice schemes can provide a very tax- and National Insurance contributions-efficient way of providing electric company cars for employees and directors. Tim Palmer reviews the position and considers how such schemes work in practice.
The government introduced changes restricting the income tax and National Insurance contributions (NICs) advantages from 6 April 2017 of providing benefits as part of an optional remuneration arrangement (OpRA). The restrictions apply to the benefits provided under a salary sacrifice arrangement (‘Type A’) or to any other arrangement under which cash can be exchanged for a benefit (‘Type B’).
The value of the benefit which needs to be reported will be the higher of:
- the cash equivalent of the benefit; or
-
the value of the salary sacrifice or cash given up.
