For company cars, especially electric vehicles, provided via salary sacrifice, what specific tax is levied on the benefit the employee receives?
Answer
Benefit-in-Kind (BIK) tax.
The tax paid on a company car obtained through salary sacrifice is BIK tax, which is calculated on the value of the car, not the salary that was sacrificed to pay for it.
Related Questions
What is salary sacrifice fundamentally an agreement between an employer and an employee to alter?By agreeing to swap cash salary for a benefit before tax is calculated, what key element is effectively reduced for tax purposes?What mandatory contributions does the employer save on when providing a benefit via salary sacrifice instead of cash?If an employee earning £50,000 sacrifices £3,000 for an extra pension contribution, what becomes their new gross salary for tax calculations?When contributing to a workplace pension via salary sacrifice, what might the employer add to the employee’s pension pot using their savings?For company cars, especially electric vehicles, provided via salary sacrifice, what specific tax is levied on the benefit the employee receives?What is the primary long-term consequence of reducing base salary through sacrifice concerning future salary reviews?How might a significant reduction in declared gross salary through sacrifice potentially affect a mortgage application?What critical state benefit qualification must employees ensure they maintain when sacrificing salary that reduces National Insurance Contributions?Compared to making a pension contribution from post-tax (net) pay, what is immediately bypassed by using the salary sacrifice method?