Government confirmation delivers absolute clarity on salary sacrifice car schemes
Tusker, the Car Benefit People, has been clear about the changes to the tax structure since the release of the Finance Bill in March 2017. However, there has still been much confusion in the industry about its impact, with many commenting that car benefit schemes would be far less cost effective.
Tusker, supported by their advisors, EY, were consistent; the changes would be much less drastic than others were forecasting and that many in the market were interpreting the new legislation too negatively.
To dispel the confusion on the rules, Tusker has been speaking directly to the policy makers in Government who were responsible for developing the new policy and for drafting the legislation. The policy makers recently confirmed, Tusker are indeed correct. This provides much-needed clarity for the industry.
Tusker CEO, David Hosking said “We decided that uncertainty had been in the market for too long. Our customers and the benefits industry overall needed clarity around salary sacrifice cars”. Hosking continues, “We went directly to the source. In a recent meeting, along with our policy advisors from EY and the policy leads from both HMT and HMRC, we received confirmation that our understanding of the rules, and how we were implementing them, was correct”.
From the point where the Finance Bill was published, Tusker was clear that the application of the new rules should only consider the amount sacrificed for the car itself, i.e. not including maintenance, tyres, roadside assistance, etc (Section 239, Finance Bill, 2017)
Tusker has also highlighted some good news for employers wanting to offer Car Benefit Schemes. Previously it was reported that Class 1A National Insurance savings would be removed for all cars other than ULEVs (those with emissions of less than 75g/Km CO2); however, this is also not the case. Employers will still be able to save National Insurance on 54% of the cars available via Tusker’s scheme.
Chris Sanger of EY comments, “Although these calculations are on the face of the legislation, it is extremely helpful to have definitive confirmation that an approach which compares the cost of the car alone with the amount sacrificed, fits with both the letter and spirit of Government’s policy”.
David Hosking continues, ‘Government has always been clear when making changes to legislation that they want to protect car benefit schemes and reduce emissions. Since April 6th, our ULEV fleet has grown 10%, so this has definitely been a positive move in meeting those objectives. For us, this confirmation of the legislation provides absolute certainty that cars can continue as a cost effective benefit of employment.’