What is a salary sacrifice car?
A salary sacrifice car is a car you lease from a third-party supplier that has partnered with your employer. The cost of the car is deducted from your salary each month before you are taxed. Unlike company car schemes, where the company pays for the car, in salary sacrifice arrangements you pay for the car and it is your responsibility.
How is a car allowance treated as a salary?
Car allowance (assuming this is a cash amount payable in lieu of a company car) is treated as an additional amount of salary and you will be charged National Insurance and income tax at your marginal rate on the full amount of the allowance.
Is 2021 the end of salary sacrifice car schemes?
There is often confusion surrounding this and many believe that 2021 signifies the death of salary sacrifice car schemes – which is not the case. Despite the addition of income tax to these schemes, there are still many benefits which can make leasing a car in this way a worthwhile option for an employee.