OPRA

Do your employees currently have a company car through salary sacrifice or instead of a cash allowance? You could be impacted by rules which came into effect in April 2017.

Questions you may have:

• How do I know if my salary sacrifice scheme is affected?
• What is the effect of these changes on my salary sacrifice scheme?
• Is my salary salary sacrifice scheme still viable ?

How does it work?

These are all areas to consider and where we can look to help. Please read the information provided below as a guide but if you have more specific questions then please reach out and letstalk.

Where employees select a company car via either a salary sacrifice arrangement or instead of a cash allowance (where they have that choice), then new rules, which came into effect from 6 April 2017, may affect the calculation of company car benefit. These new rules do not affect cars with CO2 emissions of 75 g/km and below.

Where an employee enters into an Optional Remuneration Arrangement for a car before 6 April 2017 (which includes where a car is ordered, but not delivered, prior to this date), then the existing calculation described above stands, until a variation of that arrangement or its expiry.

Where employees entered into new arrangements on or after 6 April 2017, then their company car benefit will equal the greater of :

(i) the amount as calculated under standard company vehicle BIK , and

(ii) the gross salary sacrifice / gross cash allowance forgone*.

After you have determined the greater value of (i) & (ii) above, deduct

(i) Contributions made by the emplyee for the private use of the car; and

(ii) Capital Contributions by the emplyee multiplied by the apprpriate percentage based on the CO2 emmisions

* The amount of earnings forgone in a company car arrangment is the gross salary sacrifice value/ cash alternative for your related grade.