Salary sacrifice schemes are being used by millions of people across the UK. It provides employees with a car and a monthly amount is taken out of their wage before tax. You are essentially sacrificing some of your salary at source to lease a car.

These schemes are growing in popularity, but how do they work and are there any negative implications?

As an employer there are also benefits in offering this scheme to your employees such as potential cost savings and tax efficiencies to strengthened employee attraction in recruitment and retention.

The employee will often be able to get a car that they may not have previously been able to afford and the payment they make on the car is tax free.

Some of the negative points to consider are that if you hand the car back early you may have to pay a fee to get out of the arrangement, damage is charged for when the car is returned (even scraps on alloys) and using this scheme may have an impact on your tax credits and / or pension.