Fleets received clarification on two major issues on Friday: future company car tax bands and car salary sacrifice.

The Finance Bill included the 11 company car tax bands for ultra-low emission vehicles from 2020, which were first introduced in last year's Autumn Statement but not present in the most recent Budget.

Lauren Pamma, head of fleet consultancy at Lex Autolease, said: “ provides clarity for fleets and makes switching to electric vehicles much more appealing in the longer term.”

The appropriate percentages for benefit-in-kind tax for zero emission cars will be 2%, while those for cars with CO2 emissions between 1g/km and 50g/km will vary between 2% and 14% depending on the number of zero-emission miles the vehicle can travel.

The measure also increases appropriate percentages by one percentage point to a maximum value of 19% for ULEVs with CO2 emissions of between 70g/km and 74g/km.

The appropriate percentage for a car with a CO2 emissions figure of more than 75g/km or more whichever is the lesser of:

• 20% plus one percentage point for each 5g/km driven by which the CO2 emissions figure exceeds 75g/km, and
• 37%.

The measure will be effective from April 2020.

With regards to salary sacrifice, Friday saw the culmination of months of discussions between Tusker, its tax advisors, HMRC and HM Treasury with the company announcing it had gained clarification on the benefit.

David Hosking, CEO of Tusker, said the changes to salary sacrifice, originally announced in March, completely support Government’s commitment to providing a fairer tax structure while not undermining its wider environmental policy.

He said: “It has meant that the changes to salary sacrifice put in place by Government protects cars while eradicating the arguably abusive salary sacrifice schemes when some employees had been using the legislation to save tax on wine, drones and even double-glazing.

“This move by Government is to be applauded as it prevents take-up of abusive schemes without harming car schemes that have always been taxed fairly and environmentally, is the right thing to do.

“Under the new rules, the finance rental for the car and all other costs should be separated. However, it appears that many have misunderstood the new legislation and this point has all but slipped under the radar.”

He added: “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. As a result, salary sacrifice car schemes are as attractive as they have always been.”

• For David Hosking’s full opinion piece on the salary sacrifice clarification, click here