Finance Act 2017 salsac rules spark confusion

Date: 20 September 2017

The Finance Act 2017 has brought about confusion in the industry regarding car salary sacrifice schemes.

Under the new rules, the finance rental for the car and all other costs should be separated, however, at the time of its publication, many businesses misunderstood the rules.

Due to the confusion, salary sacrifice scheme provider Tusker has sought clarification over the issue from HMRC, highlighting that employees opting for a salary sacrifice arrangement will continue to pay tax on the salary exchanged for the car, excluding peripherals such as tyres and roadside assistance.

According to Tusker, these changes "completely support" the government's plans to reduce roadside emissions. The leasing company added that the move "is in accordance with a desire for a fair tax system for all, as car schemes have always taxed fairly and environmentally".

"Tusker strongly supports the Government's initiative as it means that all company cars are taxed appropriately and the charge for the additional benefits and services does not apply to these company cars," David Hosking, CEO of the brand, said. "As a result, salary sacrifice car schemes are as attractive as they have always been."

The provider claims orders for low-emission vehicles have grown by 10% off the back of the Finance Act 2017 coming into force.

Hosking added: "Alongside the government, Tusker remains committed to supporting the UK car market and protecting company cars, given their clear benefits of encouraging the take up of new, clean, safe and more reliable vehicles, particularly among modest earners. We are delighted that the government has protected cars, endorsing them in the same way as cycle-to-work schemes and childcare vouchers. Salary sacrifice remains the most affordable way to get a brand new, fully maintained and insured car, something which so many UK workers are heavily dependent on."

Speaking to BusinessCar earlier this year, Colin Knowles, chairman of Knowles Associates, which specialises in public sector fleet management, said: "A lot of people have got the impression that salary sacrifice is finished; it isn't, not at all.

"What's happened is that HMRC has tried to put a brake on uncontrolled salary sacrifice, where firms offer all sorts of things like supermarket vouchers or even double glazing under salary sacrifice arrangements, and in a lot of cases, these schemes had no taxable benefit."

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