BiKs can you answer this conundrum?

I’m sure that most of you will have the provisions of Sch 2, Finance Act 2017 safely under your belts. The year’s grace that allows most existing BiKs (acquired before April 2017) to apply for 2017-18, comes to an end 6 April 2018.

But what if there was no agreement?

However, I can find nothing in the legislation, or professional commentary, that clarifies if the new rules apply if there was no formal salary sacrifice agreement (contract) created when the BiK was granted. Do we assume that if there is no formal salary sacrifice agreement, then Sch 2 Finance Act 2017 does not apply? Readers that have a definitive answer to this conundrum please post a comment to this blog post or email me at

Most of my director shareholder clients that have BiKs do not have contracts of employment – otherwise there would be NLW considerations – and very definitely were not party to formal salary sacrifice agreements when they acquired mobile phones or purchased a company car.

Tax planning tips video 2018

Good luck with 2017 returns, and if you have a moment to turn your attention to tax planning for clients before 6 April 2018, our latest TaxBox video “Tax planning tips” will be available this month. To register your interest complete reservation form.

Best regards,

Bob Edwards

Bob Edwards

Bob has been working with practices across the UK offering novel ways to improve cross-sales and increase new client acquisitions. He is also interested in "step changes" in legislation that offer challenges, and therefore opportunities, for practitioners to provide new recurring and one-off support services to clients.

2 thoughts on “BiKs can you answer this conundrum?”

  1. I am unclear what your concern is. Sch 2 does not refer to a contract. New ITEPA, s 69A defines optional remuneration arrangements as arrangements under which either
    a)in return for a benefit the employee gives up the right to receive an amount of earnings, or
    b)the employee agrees to be provided with a benefit rather than an amount of earnings.
    It catches any arrangement under which an employee swaps earnings for a benefit. I would have thought that an unusual occurrence in a family company; it is far more likely that the director will take the benefit as an addition to salary. The legislation is not trying to prevent that. it is aimed solely at swapping salary for something else. Are you therefor worrying about a non-existent problem?

    • I may well be worrying about a non-existent problem. S69B (3) refers to action an a “just and reasonable” basis. It will be interesting to see how HMRC approach the issue with family companies. Thank you for taking the time to post.


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