A note on recording salary sacrifice on P11Ds
05 July 2022
An example was provided in the June issue of Professional relating to how to approach recording a company car salary sacrifice arrangement on a P11D in certain situations. This was within the Q&As section of the magazine.
The scenario involved employees choosing whether they wanted a company car or a cash allowance. Several employees opted for a company car which was above their entitlement and were advised that the excess value would be processed under a salary sacrifice arrangement. The amount would be processed using a salary sacrifice pay element, evenly apportioned over the months in the tax year. It was advised that the cash equivalent of the benefit, the car allowance offered and the salary that was sacrificed would need to be compared, and the highest of the three reported on the P11D.
This isn’t correct. Guidance on optional remuneration arrangements (OpRAs) states:
“Some employees have both type A and type B arrangements under which a benefit is provided partly in exchange for the employee giving up an amount of salary and partly in exchange for giving up the option of a cash allowance. Where this is the case, the amount foregone is the total value of the type A and type B arrangements.
Example 2
An employee has the option of a cash allowance of £5,000 (type B) which he decides to give up for a car. However, the employee wants a higher specified model costing a further £1,000. So, he also gives up £1,000 of salary (type A). The amount foregone is £5,000 plus £1,000.”
Please accept our sincerest apologies for any confusion this may have caused.
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