A salary sacrifice scheme is a mechanism whereby you can sacrifice an element of your salary under an amendment to your Contract of Employment in return for a non cash benefit such as a company car.
It is likely that you pay for your current car out of your net (after tax) wage or salary. Employment law rules allow you to give up an amount of your gross (before tax) wage or salary, a procedure known as salary sacrifice.
Salary sacrifice is an established and proven mechanism in respect of other employee benefits of this nature such as childcare vouchers.
You can make tax and National Insurance savings by sacrificing an element of your salary in return for a benefit in kind payment.
You will receive less pay in return for a non cash benefit, in this case a car under a salary sacrifice arrangement through a monthly gross salary reduction.
Savings on Income Tax and National Insurance are based around your gross salary and, depending upon your gross salary plus any personal allowances, could see you saving tax and National Insurance from between 20% to 35% (based on current legislation for tax year 2016/7).
Please see www.hmrc.gov.uk for additional advice.
Entering the scheme will not affect other salary related payments to which you are contractually entitled.