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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.

Government plan to ban petrol and diesel vehicles by 2040

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i3

The Government has this week announced plans to improve air quality by ending the sale of conventional petrol and diesel cars by 2040. The Department for Environment, Food and Rural Affairs (DEFRA) has announced the changes as part of the £3billion air quality plan which includes a host of initiatives to reduce roadside emissions.

The ban won’t include hybrid vehicles, those with a smaller engine and battery-power capability, which already make up a significant portion of Ogilvie’s growing fleet of over 15,000 vehicles.

The Government also has an ambitious plan to only have zero emission vehicles on the roads by 2050. 

DEFRA’s air quality plan includes a number of ideas to provide cleaner transport and improved air quality, including:

Ultra-Low Emission Vehicles (ULEV) including a £100million investment in the UK’s charging infrastructure and plug-in vehicle grants. 

£290million towards reducing transport emissions including new and retrofitted buses and plug-in taxis.

£1.2 billion towards The Cycling and Walking Investment Strategy.

With almost 200 electric and hybrid vehicles models currently available in today’s market, and with many more ULEV scheduled to be launched in the next 12 months alone, the UK is well placed to meet the target. ULEV’s are Ultra Low Emission Vehicles with a sub 75g/km of CO2 emissions rating.

As member of the Go Ultra-Low scheme, Ogilvie Fleet company car users are encouraged to choose ULEV vehicles, with charging points available at all of Ogilvie’s UK offices.

Ogilvie Fleet has also partnered with Pod Point, one of the UK’s leading providers of home electric car charging stations, with government grants available for most vehicles.  

If you would like to know more about how Ogilvie Fleet can help your company run ULEVs then please do not hesitate to contact us.

New low emissions BIK rules removed from Finance Bill

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i3

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
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