In the Budget document, the Treasury said: "Salary sacrifice arrangements can allow some employees and employers to reduce the income tax and National Insurance that they pay on remuneration. They are becoming increasingly popular and the cost to the taxpayer is rising. The Government will actively monitor the growth of these schemes and their effect on tax receipts."

Commenting on the announcement, salary sacrifice specialist Tusker said: "Salary sacrifice for cars is different from many other salary sacrifice schemes in that the employee pays benefit-in kind taxation on the benefit that accrues. Tusker has commissioned an independent report by PwC to look into the facts. PwC concluded: 'Overall, the data shows that the salary sacrifice arrangement on its own can produce a tax-positive result.' 

"The report continued: 'Furthermore, after taking into account the additional tax payments from the company, the arrangement overall becomes tax positive and helps drive additional tax revenues to the Treasury by promoting sales, in-life management and disposal of incremental new cars into the economy.'

"We will be working closely with the Treasury to demonstrate that car salary sacrifice schemes are fundamentally different and that they generate tax and benefit the economy in many other ways."