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Posted Fri, 23 May 2025 12:06:20 GMT by HMRC Admin 20 Response
Hi Andrew Streeter,
Please see guidance at EIM42755 - Salary sacrifice: income tax effects of salary sacrifice
Thank you.

 
Posted Wed, 28 May 2025 08:32:48 GMT by Andrew Streeter
I have attempted to digest EIM42755. Am I correct in understanding that because electric vehicles emit less than 75g/km of CO2, I will pay the BIK relevant to that EV and not the tax liability of the higher monetary value (the £5,250 car allowance I have previously utilised)?
Posted Wed, 28 May 2025 09:37:51 GMT by Clive Smaldon
Gonna repeat it...you cannot pay tax on the car allowance if you no longer receive it, you will pay tax on the car allowance to the point it stops, then you are assessed on the BIK appropriate to the vehicle...doesnt matter the vehicle, if you stop receiving car allowance you cant be taxed on the value of it from then on, the value of it is NIL.
Posted Wed, 28 May 2025 09:52:34 GMT by Claudia Cronin
Thanks Clive, that makes it nice and clear. It would be very beneficial if this 'Clear plain English' was posted from HMRC so I can confirm to our payroll. I have been advised that an employee has to pay tax on whatever the higher amount is between the offered car allowance OR the company car BIK value, irrelevant on what they choose. (if they are offered an option)
Posted Thu, 29 May 2025 08:01:33 GMT by Andrew Streeter
Thank you Clive and that is the only logical answer to me. However, Claudia is right in stating that HMRC advise that if you have the option of a cash allowance or a company vehicle, you will pay the higher tax liability regardless of which you choose (unless the company car you select emits less than 75g/km of CO2). I am really hoping HMRC provide that clear, definitive answer here rather than referring me to guidance notices which are anything but clear to a layperson.
Posted Tue, 10 Jun 2025 09:09:03 GMT by HMRC Admin 21 Response
Hi Andrew,
The link you refer to is for salary sacrifice. 
For taxable benefits please refer to:
How to work out the benefit of a company car (480: Chapter 12).
Thank you.

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