Over half a million company car drivers face increased tax bills under a proposed crackdown on valuable perks by the Treasury.
Salary sacrifice schemes allow employees to exchange some of their taxable pay for benefits, such as company cars and phones. It cuts down the employees tax and National Insurance bill each month, and employers end up paying less National Insurance for the employee.
The proposed rules could come in to play as soon as April 2017. Under the proposed new plans, workers would be taxed on the full amount of salary sacrificed, meaning there would be little point in having a salary sacrifice scheme in place.
Only a few benefits will be excluded from the plan, notably pensions saving, childcare and cycling safety equipment.
The crackdown will also include other benefits, such as gym memberships and car parking spaces.
The Treasury said that the proposal does not prevent employers from providing benefits in kind to their employees through salary sacrifice, but it will remove the tax and NICs advantages that come from doing so.