April brings showers, chocolate and the start of a new tax year. And, this year, the tax changes for fleet operators are more significant than usual; most notably the changes to Salary Sacrifice and Cash Remuneration arrangements.
Finance Bill 2017
With the Spring Budget and the Finance Bill 2017 now delivered, we have surety over the rules for Salary Sacrifice. From 6th April 2017, legislation will be introduced to limit the Income Tax and employer National Insurance advantages of some salary exchange arrangements related to company car and cash allowance.
Exemptions from rules
Arrangements entered into for Ultra-Low Emission Vehicles (ULEVs) (75g/km or less) will be exempt from the new rules. For more detail on these changes, you can read our in-depth guide, here.
Optional Remuneration Arrangements
The new rules also extend to what HMRC call Optional Remuneration Arrangements (OpRA). In very simple terms, this is where an employee has the choice between a car/cash allowance or a company car. There will be no distinction made between this practice and Salary Sacrifice in terms of how the rules will be applied. When taking a car employees will be taxed on either the value Cash Allowance or the Company Car Tax Value of the car, whichever is the higher.
While the changes do introduce an added degree of complexity, transparency is key to ensure drivers have all the information they need to make the right decisions
Matthew Walters, Head of Consultancy Services and Customer Data LeasePlan UK
Salary Sacrifice for Car Schemes
Depending on scheme design, the vast majority of new Salary Sacrifice car drivers are likely to see a marginal increase in costs – in most cases a few pounds a month. Salary Sacrifice for Car schemes still represent a highly cost effective way of driving a brand new, insured, fully maintained vehicle. Plus, drivers have the surety of provision by their employer, using supplier partnerships to ensure drivers receive the best service possible.
Reporting and Quoting Systems
Our quoting tools and tax calculators have been updated with the new rules ahead of the Tax Year change – this includes cash allowance comparisons to provide full transparency over the period of the contract. In addition our Whole Life Cost (WLC) engines have been changed to reflect the correct Class 1A NIC costs based on the Cash Allowance in play or the Company Car Tax Value.
Digital Tax Guide
A new on-line Digital Tax Guide, in association with Deloitte, is available will provide Fleet Managers and Drivers alike with the tools to understand the new rules in more detail. In addition, our Comprehensive Guide to Funding and Taxation will be published later in the year – providing a detailed view on the fleet and tax landscape.
For further information please speak to your Account Manager.
If you aren’t a customer and want to find out more, contact our New Business team by calling 01753 802 098 or emailing email@example.com