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Sal-Sac specialists Tusker reacts to HMRC consultation on salary sacrifice

Business woman with a car bought on car finance

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25 August 2016

TUSKER, a specialist in salary sacrifice schemes, has reacted strongly to the news of the government’s HMRC consultation on ‘Salary sacrifice for the provisions of benefits in kind’.

In particular, how much salary sacrifice cars contribute to the UK economy.

Analysing cars ordered through its salary sacrifice schemes, Tusker says that the positive tax contribution for cars delivered in 2016 is projected to be at least £1m for the UK Exchequer. With the increases in benefit in kind (BIK) tax already announced for the future, this revenue could quadruple from new orders during next year with an estimate of £4.7m forecast for 2017, it says.

Tusker believes many salary sacrifice cars are tax positive, due to the incremental revenue from VAT on additional services, lease agreements and vehicle disposals.

Also, that the salary sacrifice cars sector is a huge supporter of British jobs – on top of the thousands of jobs in the fleet industry, they also support UK manufacturing with British built models being very popular in all schemes, and furthermore all vehicles are sourced through UK franchised dealers and serviced through independent and franchise garages.

Importantly, the company also believes that salary sacrifice is more catholic in its approach, offering more UK employees greater access to a new car than any other form of finance. There is:

  • no credit check,
  • no deposit and
  • no upfront fees

In other words, the benefit of a company car is no longer reserved for sales people, senior management or perk car drivers.

So these employees can benefit from fixed cost motoring for three years with insurance, servicing, mechanical repair and replacement tyres included and the majority of the savings offered to employees come from large corporate discounts from vehicle suppliers rather than from tax savings.

Tusker on the benefits of salary sacrifice cars

  • Salary sacrifice cars contribute positively to the UK Exchequer
  • Salary sacrifice cars have driven significant incremental new car sales
  • Salary sacrifice cars have more than doubled the growth of ULEVs compared to the rest of the market
  • Salary sacrifice cars generate taxable benefit in kind, unlike most other salary sacrifice products
  • Salary sacrifice cars are a huge driver of UK employment
  • Salary sacrifice cars are one of the safest fleets on UK roads

Additionally, Tusker says that its own driver data shows that the car schemes drive incremental new car sales. The average age of cars being replaced by new cars on salary sacrifice is 7 years and 9 months and almost half are over 5 years old and a recent survey of over 1,500 Tusker drivers showed that 92% of Tuskers customers would not have opted for a new car had it not been for the salary sacrifice car scheme. In fact, 40% of them would have bought a second hand car and nearly a quarter would have kept their current car. Tusker’s car scheme is clearly growing car sales and moving drivers into safer cars, as the proportion of NCAP 5 and 6 cars is very high under salary sacrifice.

David Hosking

David Hosking (left), chief executive officer of Tusker, added:

“We went through every single vehicle ordered on our scheme since the beginning of this year and balanced the tax savings made by the employee and employer in each case against the tax contribution from the lease. It is important to note that the vast majority of these orders are incremental new car sales for employees who would not normally be able to afford to drive a new car.”

Committed to meeting more than just financial objectives, Tusker says its schemes are structured to encourage the uptake of low CO2 vehicles, which meets with governmental targets for emissions. As a result, the uptake of low CO2 vehicles, hybrids and electric vehicles is much higher under salary sacrifice than for new car sales as a whole, with average emissions reduced to 101g/km compared with 121g/km for all new car registrations (SMMT figures).

Indeed, at the same time as this Consultation paper was released where plans are to unduly penalise ULEV drivers, the government has issued another to explore ways to encourage the uptake of Ultra Low Emission Vehicles.

According to the BVRLA, last year salary sacrifice cars had more than doubled the growth in the uptake of ULEVs compared to the market – 5.6% share of new business for salary sacrifice cars versus 2.78% for the overall market.

Hosking said: “It seems that salary sacrifice cars have been caught in the crossfire as the Government seeks to eliminate the practice of employers offering benefits that do not attract any tax on a benefit in kind, or those that solely deliver tax savings. Company cars clearly do not fall into this category and we welcome the government’s consultation to dispel the myth that car benefit schemes are the same as these other salary sacrifice options.”

More information on the salary sacrifice consultation issue

 

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