A salary sacrifice happens when an employee gives up the right to receive part of the cash pay due under his or her contract of employment. The sacrifice or exchange is made in return for the employer’s agreement to provide the employee with some form of non-cash benefit which in this instance would be a company car.

The 'sacrifice' is achieved by varying the employee’s terms and conditions of employment relating to pay. Salary sacrifice is a matter of employment law, where an employee gives up their contractual right to future cash remuneration for the period of the Scheme.

On what basis is the car provided?

Your employers enters into a leasing agreement with Car Salary Exchange to supply the car ordered under the car salary exchange scheme. Once you have chosen your car, your employer will enter into a contract hire agreement for that car and will then provide it to you under the Scheme.

The car is a company car for tax purposes and will be treated as a taxable Benefit in Kind (BIK) on you. In order to limit your tax liability Car Salary Exchange will offer a wide range of low CO2 emission vehicles that can maximise the benefit to you individually.

At the end of the agreement you will have the choice to hand the car back or to request a price to purchase the car at the market value based on the vehicle’s age and mileage.

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