WFM UK | Payroll UK: BIK Module - Salary Sacrifice Company Car and Car Fuel (OpRA)

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Overview

The Company Car and Car Fuel (Salary Sacrifice) benefit type allows employers to payroll company car and car fuel benefits that are provided through a salary sacrifice arrangement. HMRC refers to these as Optional Remuneration Arrangements (OpRA).

Under OpRA rules, where an employee gives up salary in exchange for a company car and/or car fuel, the taxable value of the benefit is not always the standard calculated Benefit in Kind (BIK) value. Instead, the taxable value is the higher of:

• the standard calculated BIK value of the benefit, and
• the amount of salary foregone (the salary sacrifice amount), adjusted for any capital contributions and employee contributions for private use.

Cars with CO₂ emissions of 75g/km or below are exempt from the OpRA comparison for the car element, so the standard BIK calculation always applies to the car.

The Salary Sacrifice benefit type is separate from the standard Company Car and Car Fuel benefit. It reuses all existing car and fuel configuration, vehicle assignment and fuel calculation behaviour, and adds salary sacrifice fields and OpRA logic on top. The standard Company Car and Car Fuel benefit type remains unchanged, and both benefit types can be used independently within the same company.

As with all benefits in the BIK Module, the Salary Sacrifice benefit is calculated and payrolled on a tax year basis (6 April to 5 April). Salary sacrifice arrangements often run for a different period, such as a two or three year lease starting part way through a tax year. Regardless of the length of the arrangement, the salary sacrifice amounts entered in the BIK Module must reflect only the amount of salary given up within the current tax year. The OpRA comparison, the Cash Equivalent and any payroll deductions are all based on these tax year figures.

Optionally, the BIK Module can also generate the salary sacrifice deduction in payroll automatically. The deduction is based on the salary sacrifice amount that applies to the current tax year, spread across the pay periods remaining in that tax year. This removes the need to key the deduction manually each pay period.

The benefit type carries the following HMRC settings, which are applied automatically:

• Tax Liability - Payrolled across the year
• National Insurance Liability - Class 1A

Contents

• Before You Begin: Configuring a Salary Sacrifice Payment Type
• Setting Up the Salary Sacrifice Company Benefit
• Applying the Salary Sacrifice Benefit to an Employee
• How the Taxable Value is Calculated (OpRA)
  • On-Screen Guidance
• Salary Sacrifice Deductions in Payroll
• Appendix
  • Changes During the Tax Year
  • Leavers
  • Payroll Rollbacks
  • Deleting a Salary Sacrifice Benefit
  • Editing Default Stop Date for Leavers After Processing

Before You Begin: Configuring a Salary Sacrifice Payment Type

This step is only required if the salary sacrifice deduction is to be added to payroll automatically. If deductions will continue to be handled outside the BIK Module, skip to the next section.

For the BIK Module to generate the deduction, a payment type must exist in Payroll that is:

• Enabled for the company that the benefit will be created under
• Configured with Include In API Calls ticked

To configure the payment type, go to:

• Payroll Module > Administration > Payment Types
• Select Add New Payment Type, naming the payment type something relevant to a Salary Sacrifice Car deduction
• Configure by ticking the boxes for:
  • Taxable
  • National Insurance
  • One-Off Payment Type
  • Include In API Calls

• Select Save

• Return to the payment type, and ensure the payment type is assigned to the relevant Company by selecting Assign PAYE Company. 

Setting Up the Salary Sacrifice Company Benefit

To add the Salary Sacrifice benefit to a company, go to:

• BIK > Administration > Company Benefits and select the relevant Company
• Select Add New Benefit
• Select Company Car and Car Fuel (Salary Sacrifice) as the HMRC Benefit Type
• Complete the standard fields as covered in Configuring Company Benefits:
  • Benefit Name - enter a name for the benefit suited to the company, 'Salary Sacrifice Car Scheme' for example
  • Notes - optional area for additional information
  • Default Stop Date For Leavers - mandatory setting for how the benefit is treated when an employee becomes a leaver
• Set Default Amount is not available for this benefit type. The benefit value is calculated from the vehicle and salary sacrifice details at employee level
• Review the Automatically Add Salary Sacrifice Deduction to Payroll? checkbox:
  • Unticked - no deduction will be generated. The benefit will still be payrolled and the OpRA comparison will still apply, but the salary sacrifice deduction must be handled outside the BIK Module
  • Ticked - a Payment Type field is displayed and becomes mandatory. Select the salary sacrifice payment type configured earlier
  • Select Save

The benefit will now display in the company benefit list and be available for selection at employee level. Salary Sacrifice benefits can be added to Benefit Groups in the same way as any other benefit, and employee eligibility rules will apply. See Configuring Benefit Groups.

Applying the Salary Sacrifice Benefit to an Employee

To apply the benefit to an employee, go to:

• BIK > Employees > Employee List > find and select the Employee
• Select Add
• Select the Salary Sacrifice benefit under Benefit Name
  • The Benefit Name shown at employee level is the name chosen when the benefit was configured at company level

Vehicle assignment and car fuel configuration follow exactly the same process as the standard Company Car and Car Fuel benefit. See Applying Employee Car and Car Fuel Benefit Manually for guidance on the Add Vehicle, Private Use, Capital Contributions, Employee Contributions, Date Available From, Stop Car and Add Fuel fields.

In addition to the standard fields, the following salary sacrifice fields are available on the main benefit row (not the individual vehicle breakdown rows):

• Car Salary Sacrifice (Annual)
  • Mandatory
  • The amount of salary the employee will give up in exchange for the car within the current tax year
  • Where the arrangement starts or ends part way through the tax year, enter only the amount that falls within the tax year, not a full 12-month figure
  • Accepts positive monetary values only, up to two decimal places. Zero (0.00) is accepted
• Car Amount Foregone (YTD)
  • Non-Mandatory
  • The amount of car salary sacrifice already given up in the current tax year that has not been processed through Fourth payroll. For example, this applies when migrating from a previous payroll provider part way through the tax year
  • Do not include amounts sacrificed in previous tax years
  • Cannot be higher than the Car Salary Sacrifice (Annual) amount
• Fuel Salary Sacrifice (Annual)
  • Mandatory where car fuel has been added
  • The amount of salary the employee will give up in exchange for car fuel within the current tax year, following the same rules as the car amount above
  • Accepts positive monetary values only, up to two decimal places. Zero (0.00) is accepted
• Fuel Amount Foregone (YTD)
  • Non-Mandatory
  • As above, for the fuel element, limited to the current tax year
  • Cannot be higher than the Fuel Salary Sacrifice (Annual) amount
• Total YTD / Sacrificed To Date
  • Read-only
  • Displays the combined car and fuel amount sacrificed so far in the current tax year. This includes any Amount Foregone entered, plus amounts processed through Fourth payroll. The field updates each time a payrun is closed

Example:

An employee signs a three-year salary sacrifice car agreement starting 1 October 2026, giving up £200 per month for the car. The agreement runs across four tax years, but only the portion falling within the current tax year (1 October 2026 to 5 April 2027) is entered:

• October 2026 to March 2027 = 6 months x £200 = £1,200.00
• Enter £1,200.00 as the Car Salary Sacrifice (Annual), not £2,400.00 (a full year) or £7,200.00 (the full agreement)

For a monthly-paid employee whose benefit starts in period 7, the automated deduction would be £1,200.00 / 6 remaining periods = £200.00 per period, matching the agreement.

• Select Save when complete

The Cash Equivalent is calculated automatically using the OpRA rules below, and the benefit is applied to payroll.

How the Taxable Value is Calculated (OpRA)

The OpRA calculation is applied as a decision layer on top of the standard BIK calculation. The car and fuel elements are compared independently.

Both sides of the comparison relate to the current tax year only. The standard BIK is prorated for the days the car and fuel are available within the tax year. The salary sacrifice side uses the amounts entered for the current tax year. Entering a full-year or full-agreement figure for a part-year arrangement would therefore overstate the taxable value.

Car element

1. The standard car benefit is calculated in the normal way, using List Price, Accessories, BIK %, Capital Contributions (capped at £5,000) and any reduction for unavailability
2. The OpRA value is the Car Salary Sacrifice (Annual) amount, reduced by two items: the capital contribution deduction (Capital Contributions x BIK %, adjusted for availability) and any Employee Contributions for private use
3. Where the car's CO₂ emissions are above 75g/km, the Cash Equivalent for the car is the higher of the two values
4. Where the car's CO₂ emissions are 75g/km or below, the standard car benefit is always used, regardless of the salary sacrifice amount

Fuel element

The fuel Cash Equivalent is the higher of the standard car fuel benefit and the Fuel Salary Sacrifice (Annual) amount. Stop Fuel and Make Good rules continue to apply.

Example:

An employee has a petrol car for the full tax year (6 April to 5 April) with the following details:

• List Price of £10,000 and Accessories of £100
• CO₂ emissions of 76g/km, giving a BIK rate of 21%
• Free fuel provided
• No capital contributions or employee contributions

Under the agreement, the employee sacrifices £2,400.00 for the car and £6,000.00 for fuel within the tax year, and is paid monthly.

• Car: Standard BIK = £10,100 x 21% = £2,121.00. Salary sacrifice = £2,400.00. As CO₂ is above 75g/km and the salary sacrifice is higher, the car Cash Equivalent is £2,400.00
• Fuel: Standard fuel benefit = £29,200 x 21% = £6,132.00. Salary sacrifice = £6,000.00. The standard fuel benefit is higher, so the fuel Cash Equivalent is £6,132.00
• Total Cash Equivalent: £8,532.00 for the tax year, payrolled as £711.00 notional pay per period over 12 periods
• Salary sacrifice deduction (if enabled): (£2,400.00 + £6,000.00) / 12 = £700.00 per period

The Cash Equivalent always represents the final taxable value for the tax year and remains the single value used by payroll.

On-Screen Guidance

To help users understand which value has been used, the following guidance is displayed on the employee benefit record. These messages are informational only and do not block any actions.

• Hovering over the ? icon at car benefit level displays:
  • "Salary Sacrifice (OpRA) applies to this benefit. For cars above 75g/km, the taxable value is the higher of the calculated benefit and the amount foregone. For 75g/km or below, standard BIK rules apply."

• Hovering over the Cash Equivalent on the main benefit row displays one of the following, depending on the outcome of the OpRA comparison:
  • CO₂ above 75g/km and salary sacrifice lower than BIK: "Cash Equivalent is based on Calculated BIK Value of the Car Benefit, not salary sacrifice."
  • CO₂ above 75g/km and salary sacrifice higher than BIK: "Cash Equivalent is based on Salary Sacrifice, not the Calculated BIK Value of the Car Benefit."
  • CO₂ 75g/km or below: "Cash Equivalent is based on Calculated BIK Value of the Car Benefit, not salary sacrifice because the car produces less than 75g/km of Co2"

These messages only appear on Salary Sacrifice benefits. Standard Company Car and Car Fuel benefits and all other benefit types are unaffected.

Salary Sacrifice Deductions in Payroll

Where Automatically Add Salary Sacrifice Deduction to Payroll? is ticked on the company benefit, a salary sacrifice deduction is created in payroll when the Payroll Preview is generated. The deduction:

• Is created as a negative payment using the Payment Type selected on the company benefit
• Combines the car and fuel salary sacrifice amounts into a single deduction
• Is calculated as the combined Salary Sacrifice (Annual) amounts for the current tax year, less any Amount Foregone (YTD), divided by the number of pay periods remaining in the tax year
• Applies only while the benefit is active, and stops when the benefit stops

To view the deduction, go to:

• Payroll > Employees > Employee List > find and select the Employee > View Payroll Summary > Payments

• The salary sacrifice deduction is the per period amount of salary the employee is giving up, based on the Salary Sacrifice (Annual) amounts for the current tax year.
• The notional payment is the taxable value of the benefit, based on the Cash Equivalent. It is added to taxable pay for Income Tax purposes only.

The Cash Equivalent is decided by the OpRA comparison, so the notional payment depends on which value was used:

• Standard BIK used - where the standard BIK is higher, or the car's CO₂ emissions are 75g/km or below, the notional payment is based on the standard BIK. It will usually differ from the deduction, although the two may occasionally match by coincidence.
• Salary sacrifice used - where the salary sacrifice amount is higher, the notional payment is based on the salary sacrifice amount, adjusted for any capital contributions and employee contributions. It may be equal to, or lower than, the deduction.

Because the car and fuel elements are compared separately, one element may use the standard BIK and the other the salary sacrifice amount. For example, in the example in How the Taxable Value is Calculated (OpRA), the car uses the salary sacrifice amount (£2,400.00) and the fuel uses the standard BIK (£6,132.00). This gives a monthly notional payment of £711.00, against a monthly salary sacrifice deduction of £700.00.

When the payrun is closed, the Total YTD / Sacrificed To Date field on the employee benefit record updates with the amount processed.

Appendix

The sections below cover edge case scenarios that may arise after a Salary Sacrifice benefit has been set up and applied to an employee. These include:

• Changes to the arrangement during the tax year
• Employees leaving
• Payroll rollbacks
• Deleting a benefit
• Editing the Default Stop Date For Leavers setting after a benefit has been processed

Each scenario explains how the BIK Module recalculates the Cash Equivalent and any salary sacrifice deductions, so that payroll stays accurate for the current tax year.

Changes During the Tax Year

The Cash Equivalent recalculates automatically when the salary sacrifice amount, vehicle or benefit dates change. Updated values apply to future payroll runs only. Any amount over or under payrolled is corrected across the pay periods remaining in the tax year.

• Changing the salary sacrifice amount: Update the Salary Sacrifice (Annual) field(s) to the revised total for the current tax year, including amounts already sacrificed, and select Save. The OpRA comparison is re-run. Where the deduction is automated, the next available pay period uses the new annual amount, less the amount already sacrificed, divided by the pay periods remaining
• Amending the Amount Foregone (YTD): This can be amended at any time, including after payruns have closed. The deduction is recalculated going forward
• Starting the benefit later in the year: Enter only the salary sacrifice amount that falls between the benefit start date and 5 April. The standard BIK is prorated for the days available and compared against that salary sacrifice amount. The resulting Cash Equivalent, and any automated deduction, is applied from the start period across the remaining pay periods
• Arrangement ending part way through the tax year: Where the agreement ends before 5 April, the Salary Sacrifice (Annual) amount should include only the salary given up up to the end date. Enter the stop date against the car, and the fuel if applicable, so that the standard BIK is also prorated to the same date
• Stopping the car: Select Stop Car and enter a stop date. The standard BIK is prorated and compared against the salary sacrifice amount for the tax year, and the result is spread across the tax year. If the car needs to be restarted, remove the stop date
• Stopping fuel: Select Stop Fuel and enter a stop date. The fuel Cash Equivalent is recalculated over the remaining pay periods
• Make Good on fuel: Where the employee makes good the full cost of private fuel, select Make Good. The fuel Cash Equivalent is recalculated to £0.00, and any amount already payrolled is refunded
• Changing vehicle: Stop the current vehicle on the existing Salary Sacrifice benefit record. Then add a new Salary Sacrifice benefit record for the new vehicle, with its own salary sacrifice values covering only the remainder of the tax year

Leavers

When a termination date is entered for an employee with a Salary Sacrifice benefit:

• The automated salary sacrifice deduction stops immediately, regardless of the termination date entered
• The Salary Sacrifice (Annual) amounts for car and fuel are set to match the amount sacrificed to date in the current tax year
• The benefit stop date is set according to the Default Stop Date For Leavers setting on the company benefit, and the Cash Equivalent is recalculated across the remaining pay periods

Payroll Rollbacks

When a payrun is rolled back:

• Salary sacrifice deductions for the rolled back period(s) are removed, and the Total YTD / Sacrificed To Date is reduced accordingly
• The deductions are reapplied when the payrun is re-run and closed
• If the Salary Sacrifice (Annual) amount is changed after a rollback, the next payroll close uses the new amount, less any amount foregone, divided by the pay periods remaining in the tax year. The pre-rollback deduction value is not carried over

Deleting a Salary Sacrifice Benefit

An employee's Salary Sacrifice benefit can be deleted provided it has not been processed through payroll. If it has been included in a payroll run, roll back payroll to the period in which the benefit was first applied, and then delete it. Deleting the benefit unassigns the vehicle, allowing it to be selected again.

A company-level Salary Sacrifice benefit cannot be deleted while it is assigned to employees and has been payrolled. The Delete button will be disabled with the message "This benefit cannot be deleted as it has been assigned to employees and payrolled." Once all employee benefit records using it have been rolled back and deleted, the company benefit can be deleted. See Deleting a Company Benefit.

Editing Default Stop Date for Leavers After Processing

The Default Stop Date For Leavers setting on a company benefit can now be edited after the benefit has been processed through payroll. HMRC Benefit Type and Event Type remain locked once processed.

To edit the setting, go to:

• BIK > Administration > Company Setup > select Company
• Select the required Benefit
• Update Default Stop Date For Leavers as required
• Select Save

The new setting only applies to employees who have a termination date added after the change is saved. Employees with an existing termination date are not affected, and their benefit stop dates are not recalculated. Where the setting is changed more than once, each employee's benefit uses the setting that was active when their termination date was added.

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The information provided herein is for informational purposes only. It does not constitute legal, tax, accounting, or other professional advice. It describes functionality and configuration options available within Fourth's solutions and services. The appropriate settings for your organisation will depend on your specific circumstances and requirements, and Customers remain solely responsible for all decisions relating to the configuration and usage of Fourth's solutions and services. The information reflects Fourth's understanding of applicable laws and regulations at the time of publication and may not reflect subsequent changes. Customers should seek independent professional advice regarding their specific compliance requirements.