Salary sacrifice drivers continue to benefit following tax changes, says Tusker
Changes to the tax treatment of salary sacrifice cars,
which comes into effect on Thursday (6 April), do not appear to have had any effect
on orders for new cars at Tusker.
In fact, the salary sacrifice provider claims to have
continued to see an increase in car orders, exceeding its targets for the first
few months of 2017.
The Autumn Statement last November detailed a change to
salary sacrifice; that those who choose a salary sacrifice car will pay tax on
the greater of the taxable value of the vehicle or the salary being
sacrificed. Ultra-low emission cars with CO2 up to 75g/km are exempt from
the new rules, which come into force for new car orders from the 6 April.
Existing contracts are protected until April 2021.
Tusker says it has conducted detailed research into the reasons why car benefit
schemes continue to be attractive. The findings explain why orders are
projected to increase steadily this year, without a surge in orders before the
changes take place.
According to Tusker’s survey, only 3% of drivers entered the scheme because of
tax savings. The vast majority, 77%, chose their car because of the
all-inclusive, hassle-free package which offered “great value” against other
methods of driving a new car.
Salary sacrifice car
schemes have an all-inclusive fixed cost structure, giving drivers the peace of
mind that they can budget accurately for all their motoring costs. Also in the
survey, many employees acknowledged the fact that because maintenance and
repairs were included they never had to worry about unforeseen garage costs.
The survey also found that drivers particularly liked the fact that there were
no initial deposits or credit checks, the scheme was easy to join and that by
going through Tusker they had access to corporate discounts. The tax
efficiencies actually ranked at the bottom of the list of possible benefits to
the driver in the survey, according to the company.
There has been an assumption that any tax benefits of salary sacrifice
cars would be significantly eroded following the change to the tax treatment in
April, according to Tusker. However, the company said: “The reality is actually
very different. Across the thousands of cars that Tusker delivered on
schemes last year, if the same cars were ordered after the 5 April deadline,
more than half would not be affected by the government’s changes; either because
the cars were ultra-low emission vehicles or because the drivers were already
paying more in benefit-in-kind tax than tax on the salary being sacrificed. Of
the remaining vehicles, more than a quarter would only see an average increase
of just over £2 a month.
Paul Gilshan, chief marketing officer at Tusker, said: “Our survey has clearly
demonstrated that the success of salary sacrifice cars lies in their simplicity
of offering all-inclusive fixed cost motoring. The tax efficiencies are
still there, and can certainly make some cars more cost effective, but for our
drivers the most important factor remains the fact that all they have to pay
above their monthly fee is the cost of fuel.”