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Ogilvie Fleet News & Blog

Cash or Car: the impact of OpRA

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Following the Finance Bill Update, Optional Remuneration Arrangements (OpRA’s) are changing the way employees are taxed on schemes that swap salary for benefits.

The new rules came into effect on 6th April this year and affect people who choose to take a company vehicle instead of a cash alternative.  Essentially, this means that an individual will be taxed on the greater amount of the company car tax or the income tax payable on the cash alternative.

Cash or car

The graphic above highlights that in some cases an employee who chooses a low emissions vehicle will inadvertently face a higher tax bill, whilst the employer will see a rise in National Insurance Contributions (NIC).  However, Ultra-Low Emission Vehicles (ULEV’s), those with emissions under 75g CO2/km, are exempt.

Ogilvie Fleet recently held our inaugural Fleet Taxation Forum, in association with Deloitte, to discuss the changes in the recent Finance Bill update and the implications on fleets and drivers.

Ogilvie Fleet's online company car tax calculator takes the OpRA changes into account and works out whether you will be paying tax on a vehicle or the Optional Remuneration.

To find out more about the changes, you can view the presentations here.

HMRC confirms good news for salary sacrifice

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Twelve months on from the uncertainty resulting from the governments consultation on salary sacrifice benefits,  it was a welcome relief to see a positive story about salary sacrifice cars in a recent article by the BVRLA.

In the Finance Act, published 20th March 2017, the government clearly set out their desire to promote salary sacrifice schemes that supported a fairer tax regime and endorsed their environment requirements. This meant that true employee benefits such as child care vouchers, cycle to work schemes and cars were protected and the more questionable schemes were removed.

However the uncertainty created during last year’s consultation has left many people unsure about which benefits they should be offering to their employees therefore it was great to see that HMRC and HM Treasury have clarified their position on salary sacrifice cars. In particular that the finance rental should be separated out from all other costs when calculating the higher of the tax saving on the salary sacrificed and the normal company car benefit in kind. This validates the changes that Ogilvie made to our system as of 6th April 2017.

With the future of salary sacrifice cars confirmed we believe that it remains a fantastic way for businesses to offer their employee’s an affordable way of running a brand new, fully maintained and insured car.

Richard Jessop
Head of Salary Sacrifice

MiSalarySacrifice will be exhibiting at Employee Benefits Live from 10—11th October. Visit our stand to talk to Richard and his team about how car salary sacrifice schemes can help you attract and retain staff.

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New low emissions BIK rules removed from Finance Bill

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A proposed change to Benefit-in-Kind tax rates for ultra-low emission vehicles has been scrapped from the Finance Bill that was announced in the spring budget.

The snap election means parliament will be dissolved on May 3, with Finance Bill subsequently reduced from 762 pages down to 130 to ensure it is approved by both Houses of Parliament.

Whilst the 15 new tax bandings, due to take effect from 2020, will now be omitted form the Bill, Optional Remuneration Arrangements and changes to Vehicle Excise Duty are still included.

The news will be welcomed by the industry that had pushed for the Finance Bill to be discussed at length prior to it, although the changes could still come into place in the autumn budget.

A specialist industry tax advisor commented: “The Commons wasted no time in approving the Finance Bill, which goes to the House of Lords today and then to Her Majesty on Thursday (27th). The Chancellor said that measures removed from the Bill would return to parliament after the General Election, with the likelihood that effective dates would remain unchanged. It thus seems most likely that the Finance Act in the next parliament would receive Royal Assent in mid-September, just like FA 2016. We can’t rule out enactment by the third week of July – in line with the original timetable.”

More information can be found on the Fleet News website here.

True or False - has the budget affected salary sacrifice?

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MiSalarySacrifice from Ogilvie Fleet offers an easy way for employees to drive away a brand new, fully insured and maintained vehicle, with one monthly payment through their salary. The Governments recent Finance Bill made some changes to the way the schemes operate, but Richard Jessop, Head of Salary Sacrifice is here to explain some common misconceptions about the changes. 

Q1 - ‘salary sacrifice schemes have been scrapped by the Government’

FALSE. All that has changed is the tax treatment. The Government has approved car benefit schemes so it's business as usual.

Q2 - ‘prices go up for all employees’

FALSE. Around half of the salary sacrifice drivers currently in schemes are in cars that would not be affected by the new rules, either because they have opted for a ULEV or because the drivers are already paying more in gross Benefit in Kind (BiK) than the gross salary being sacrificed. For the rest, over a quarter will see an average increase of less than £2.50 per month.

Q3 - ‘there are no longer any financial benefits for employees’

FALSE. There are still huge savings to be made with NI savings and manufacturer discounts.

Q4 - ‘there are no longer any National Insurance savings for employees’

FALSE. NI for employees is NOT affected by the new rules. NI savings remain for all employees.

Q5 - ‘only ULEVs are available through such a scheme’

FALSE. The savings for ULEVs are greater under the new salary sacrifice rules, but drivers can continue to choose any car, make or model with varying savings depending on their own circumstances and the CO2 rating of the vehicle.

Q6 - ‘I can still get a car on a salary sacrifice car scheme’

TRUE. Salary Sacrifice schemes are here to stay and still provide great value and worry free motoring.

For more information on MiSalarySacrifice, visit the website here, call 0330 333 1283 or email This email address is being protected from spambots. You need JavaScript enabled to view it.

 


Ogilvie Fleet is a registered company in Scotland with company number SC067027
Ogilvie House, 200 Glasgow Road, Stirling FK7 8ES
VAT registration number 400 892 864
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