HMRC have published guidance on the salary sacrifice optional remuneration rules which took effect from 6 April 2017.

The new rules largely see the withdrawal of the Income Tax and National Insurance benefit where an employee gave up a right to earnings in return for a benefit.

There are a number of exemptions from the new rules, including salary sacrifice to a registered pension. Care should be taken to ensure that such arrangements are operated correctly, especially with regard to directors where the timing of entitlement to remuneration will be critical to a successful salary sacrifice.

It should be noted that the new rules can impact company car taxation where the individual is required to give up a cash amount of earnings or car allowance in return for the company car. Here the relevant amount treated as earnings is the greater of the benefit in kind cash equivalent and the amount forgone in relation to the benefit. The new rules will not catch ultra low emission vehicles (cars with CO2 emissions under 75g/km) and the employee can only be taxed on benefit in kind value of the car.

The guidance can be found at

Employers who operate such arrangements should take advice to ensure they are operating the new rules correctly.

Contact the Craig Simpson for further clarification 01332 365855