Fleet News

ACFO worried how salary sacrifice changes could impact existing schemes

ACFO has called on the Government to ensure employees, who are part way through a contract for a car, are protected if current salary sacrifice rules are altered.

HM Revenue and Customs (HMRC) has launched a consultation on the future tax treatment of salary sacrifice schemes, exploring the potential impacts on employers and employees, should the Government decide to change the way the benefits code applies when a benefit-in-kind is provided in conjunction with a salary sacrifice or flexible benefit scheme.

However, the consultation gives no indication whether those employees who have already taken delivery of a salary sacrifice car would be protected.

ACFO chairman John Pryor said: “We have real concerns about introducing a change of this magnitude without mentioning any ‘grandfathering’ in relation to existing salary sacrifice schemes. It would be unfair on drivers to force cost increases part way through a contract period.”

ACFO is also concerned about the timescale of the introduction of any changes if current rules are altered. “Many companies will struggle to make changes for salary sacrifice car schemes by next April,” continued Pryor. “What’s more, employers with active salary sacrifice schemes and their employees potentially face unknown risks as vehicles are being ordered now and over the coming months without knowledge of what may happen in the future. There are a lot of issues and companies must assess the potential impact.”

ACFO says that HMRC is keen to hear from individual companies and fleet managers as part of the consultation, which runs until October.

The fleet representative body highlighted its concerns while discussing a range of issues impacting its members at a recent meeting with HMRC.

It also discussed the benefit-in-kind tax treatment of ultra-low emission vehicles (ULEVs), how new lease accounting rules will impact on the tax treatment of leased assets and the publication of Advisory Fuel Rates (AFRs) for plug-in vehicles.

ACFO was represented at the meeting by Pryor and deputy chairman Caroline Sandall. The pair were joined by Jay Parmar, director of policy and membership at the British Vehicle Rental and Leasing Association (BVRLA).

The Government has also launched a consultation on company car tax for ultra-low emission vehicles, with the suggestion that plug-in vehicles could be taxed according to their zero emissions miles capability from 2020/21 onwards.

Pryor said: “What the Government is proposing makes logical sense. However, ACFO’s major concern is that just as the current tax system is straight-forward to understand and administer that must be the case with any revisions. If a mileage element is introduced it must be fair and sensible.”

He added: “At the meeting HMRC made it clear that it wanted to hear the views of individual fleet managers as well as company car drivers and not only those of trade associations such as ACFO. We are therefore asking our individual members to respond to the consultation documents.”

He concluded: “HMRC made it clear that it wants to have regular - perhaps quarterly meetings - with ACFO to discuss issues of mutual interest and concern. We are delighted that HMRC wants to engage with ACFO and we have an ‘open door policy’ with them and would encourage officials to attend our meetings and seminars.”

For more on the potential impact of suggested salary sacrifice changes, read the next edition of Fleet News.

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  • Petrol Paul - 07/09/2016 13:43

    Yes this is a very important consession to secure to ensure those emplyee's who made an informed decision are not unfairly penalised. Rather like company cars employees must be able to select a car with certainty as to what future costs and liabilities are for at least the next three years. I think its also worth reminding the government that typically salary sacrifice cars are low emission vehicles (otherwise its simply not tax effecient) replacing older more polluting vehicles and that the UK car manufacturing base (like the Mini brand who are popular with Sal Sac) creates UK jobs. The government already gets BIK revenue from Salary Sacrifice cars - be careful not to spoil a good thing!

  • Paul - 10/10/2016 15:16

    Think we all need clarification that employees who are part way through a contract for a car, are protected if current salary sacrifice rules are altered.

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