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Fleet Hire urges Government not to tamper with Salary Sacrifice schemes

Date: 29 March 2016   |   Author: Daniel Puddicombe

Contract hire company Fleet Hire has called on George Osborne not to 'tamper' with salary sacrifice schemes for cars in the wake of his Budget announcements last month, which casts doubts over the future of such schemes.

Osborne announced that the Government was concerned about the growth of salary sacrifice schemes and their impact on tax revenues. According to Fleet Hire, clearance requests for salary sacrifice arrangements from employers to HMRC have increased by over 30% since 2010.

The Government is therefore considering limiting the range of benefits that attract income tax and National Insurance Contribution advantages when provided as part of salary sacrifice schemes, the chancellor said in his speech.

"The chancellor should resist the urge to tamper with salary sacrifice car schemes as they are 'tax positive' to the exchequer, and they open up wider car ownership to lower paid workers who would not otherwise be able to afford it.  They also promote the uptake of cleaner, 'green' cars with low carbon emissions," Graham Hale, chief executive of Fleet Hire said.

"Whilst salary sacrifice car schemes are undoubtedly tax beneficial to employees, HM Treasury through the company car status provision [receives] Benefit-in Kindtax linked to the P11D and CO2 emissions rating of the car [from the employee], while the employer pays Class 1A NICs on provision of a company car to the employee," he added.