Chancellor of the Exchequer George Osborne delivered the Government’s annual Autumn Statement in the House of Commons today (Wednesday, November 25).
Sometimes described as a mini-Budget, he revealed to the nation the state of the country’s economy and public finances, in line with the latest economic forecasts from the independent Office for Budget Responsibility. Post the May general election, the Autumn Statement was combined with the Spending Review, which determines how the government will, over the course of the Parliament, spend on Government departments and public services £4 trillion of taxpayers’ money - up from £3.6 trillion in 2010/15.
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.
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 have once again worked with taxation expert Colin Tourick to produce the 2018-19 Company Car and Van Tax Guide.
The book contains the latest information on vehicle taxation including optional remuneration, salary sacrifice and car allowances, following the autumn budget last year and the spring statement in March. The book covers all areas of fleet taxation and will help both fleet managers and drivers.
Colin Tourick is a professor of automotive management and has been advising the industry on feet related matters for over 20 years.
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.
MiSalarySacrifice, Ogilvie Fleet’s dedicated salary sacrifice division, is delighted to be exhibiting at Europe’s largest rewards and benefits event at London’s Olympia National next month.
Staff from the MiSalarySacrifice team will be on hand to talk through the benefits of offering salary sacrifice cars to employees, along with an opportunity to win an iPad via our new MiSalarySacrifice driving game.
2015 is going to be a busy year here at Ogilvie. We're just 3 months into the year and have three new starters targeting 3 new areas of business for us to expand into. Our latest recruit is Richard Jessop as Head of Salary Sacrifice and follows the recent announcement of a major new £100 million funding facility with HSBC.
Historically we've concentrated on contract hire fleets of approximately 100 vehicles but following the appointment of Darren Hill, David Raponi and Richard Jessop together with our latest funding facility i'm sure it's plain to see that 2015 is going to be a good year.
Demand from small and medium-sized businesses to offer their employees an increasing range of flexible benefits has underpinned demand for Ogilvie Fleet’s salary sacrifice car solution in its first 12 months of availability.
A total of 15 Ogilvie Fleet customers have to date signed up to MiSalarySacrifice and a further 12 organisations are already in the pipeline with an ever-increasing number showing interest daily.
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.