Fleet Hire has reported a brisk increase in demand for its car salary exchange schemes following tax changes in the Autumn Statement.

From April this year, employees entering into new arrangements will pay benefit-in-kind (BIK) tax on a new calculation for the cash equivalent of the car.

Where the car is an ultra-low emission vehicle (ULEV), with an emissions rating of 75g CO2/km or less, there is no change.

For other vehicles, the cash equivalent will be the higher of the current emissions-based calculation and the gross salary surrendered.

Employees who entered or will enter into car salary exchange arrangements before April will not be affected by the tax changes.

The taxation on their cars will remain unchanged for the next four years.

Graham Hale, managing director of Fleet Hire, said: “The key features of our car salary exchange solution, including all-inclusive servicing and repair, road fund licence, fully comprehensive insurance, corporate discounts and no deposit, continue to provide employees with an attractive, cost and time effective way to access a new car.

“We are pleased that we have clarity from the Government that cars will continue to feature as a valuable employee benefit.”

Zaf Iqbal, partnerships director at Fleet Hire, said: “Initially, the financial impact of the Government’s changes was not properly understood.

"So we’ve been busily explaining the true impact to our customers and employee benefits partners.

“As BIK rates rise over time, many cars are either totally unaffected or only mildly affected by the new rules.

"In summary, the changes complement the existing company car tax regime by further re-enforcing the contribution company cars are making to wider green initiatives."