General election call sees company car-related tax measures axed from Finance Bill
The government’s decision to call a snap election has led
to several measures proposed by Chancellor of the Exchequer Philip Hammond in
his spring Budget being dropped from the 2017 Finance Bill - including company
car benefit-in-kind tax rates for 2020/21 and 100% first year capital
allowances on workplace electric vehicle charging equipment.
Analysis of the amendments has found that the government
has made a U-turn on more than two thirds of the clauses proposed by Mr Hammond,
keeping just 25 of the 84 clauses originally proposed.
The decisions have been taken to truncate the Bill as
there was not enough time to properly consider all of the proposals ahead of
Parliament being dissolved on 3 May due to the general election on 8 June.
However, in the event of a Conservative election victory,
it is widely expected that many of the dropped measures will be reintroduced.
The government’s measure in relation to capital allowance
on workplace electric vehicle charging equipment was due to be backdated to
expenditure incurred on or after 23 November 2016 and would expire on 31 March,
2019 for Corporation Tax and 5 April, 2019 for Income Tax purposes.
The reading of the Finance Bill in the House of Commons
‘wash up’ sessions on Tuesday (25 April) revealed that Optional Remuneration
Arrangements (OpRAs - or salary sacrifice/cash allowance measures - and the
Vehicle Excise Duty changes introduced on 1 April, had been included in the Bill.
David Bushnell, product manager - mobility, Alphabet, who
highlighted that the measures had been cut said: “Only time will tell whether
that means the [cut] measures have simply been delayed until the Autumn Budget
or are now up for debate again.
“With the snap general election announced, the Finance
Bill had to be introduced before Parliament was dissolved and clearly some
things have had to be removed from it in order to avoid the financial wheels of
government grinding to a halt. Which is itself a good analogy for the strategic
value of mobility to a modern business.
“The industry had pushed hard for the original Finance
Bill to be discussed and debated at length so that the implications of the
changes proposed were fully understood. The concern was that this Finance Bill
was a ‘knee-jerk’ reaction to the issues of a declining tax revenue base and
concerns about air quality.
“Our key message to fleet decision-makers around the UK
is for themselves not to make a knee-jerk, short-termist reaction to the government’s
“Some corporates may be mulling over that offering ‘cash’
to employees is more straightforward, simpler and possibly cheaper alternative
to offering a company car. But this views the company car purely as a cost or a
‘perk’ - it doesn’t recognise that a car is often an essential tool which is an
investment in the cost of doing business.
“Similarly, for any organisations considering such a move
don’t rush into action without expert help and advice. You may find the cash
allowances you set actually cost more than a company car programme and
incentivise wrong behaviours like over-inflating business mileage and
‘double-dipping’ on travel expenses. Don’t under-estimate the benefits of
company car schemes to employees and its value for recruitment and retention.
“Finally, no organisation should be under any
misconception that their environmental responsibilities and duty of care
obligations simply disappear with moving to a cash option - however your levers
to control and influence these would be significantly reduced.”