Michelle Howles, director, Affinity Leasing, discusses what the salary sacrifice changes will mean for employers and HR professionals

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In the Autumn Statement, the Chancellor of the Exchequer announced salary sacrifice schemes and benefits in kind schemes will, from April 2017, pay the same taxes as everyone else. Some salary sacrifice schemes that allow employees to give up their salary for a non-cash benefit will be abolished as Chancellor Philip Hammond described the benefits as “unfair”. But what does this mean for you or your company?

As Hammond said: “The majority of employees pay tax on a cash salary. But some are able to sacrifice salary and pay much lower tax on benefits in kind.” He continued: “This is unfair, and so from April 2017 employers and employees who use these schemes will pay the same taxes as everyone else.”

Vehicle finance specialists Affinity Leasing explains what this means to those responsible for existing salary sacrifice car schemes and businesses thinking of pursuing this employee benefit. Earlier this year, HM Revenue and Customs (HMRC) published a consultation paper looking at the salary sacrifice and flexible benefits available, such as cash alternatives in lieu of taking a company car. Hammond today, backed recent HMRC proposals for a crackdown on salary sacrifice schemes and the announcement is aimed at addressing the rising costs and Income Tax and National Insurance contributions payable on such schemes.

However, for those responsible for existing salary sacrifice car schemes or those thinking of offering this benefit to their staff, this is a cause for concern. For businesses of all sizes and anyone with a staff salary sacrifice car scheme in place, they can now move it to Affinity Leasing free of charge, and they will no longer be restricted or tied due to previous scheme constraints.

So the tax change doesn’t need to be all bad. Affinity Leasing is supporting employers who currently offer salary sacrifice schemes to switch to an alternative scheme offering brand new vehicles on personal lease terms and finance as a voluntary benefit, which has no Benefit In Kind tax payable. Industry leaders in car leasing, Affinity Leasing has over the past 12 years provided thousands of cars via our scheme, partnering with leading vehicle manufacturers and funders to match individual needs.

Unlike many salary sacrifice car schemes, Affinity Leasing’s scheme is free for companies to join and offers brand new vehicles, often with large discounts, to members of voluntary benefit schemes.

For those responsible for salary sacrifice car schemes already, our scheme is quick and easy to set up, has minimum administration and can supply a wide variety of makes and models to suit the needs of the driver without needing to be restricted by the CO2 emissions of the vehicle or the cost to the driver of BIK tax.

For more scheme information, contact myself at 01299 269521 or by emailing: Michelle.Howles@affinityvehicleleasing.com

Affinity Leasing