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Q: I have a client who is being provided with an electric car via his employment. As the car is very expensive the employer wants my client to contribute to the cost, by salary sacrificing a fixed amount from his pay each month. Can the amount deducted from his pay be included on the P11D as a payment for private use?

A: A salary sacrifice arrangement is an agreement to reduce an employee’s entitlement to cash pay, usually in return for a non-cash benefit. So, what is happening, is the employee’s gross pay is being reduced, and in return their employer provides them with a company car. A reduction in salary is not a payment for private use, so cannot be included as a deduction on the P11D. The client would need to make an actual payment out of their net pay, for a deduction to be allowed.

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