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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