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Salary sacrifice drivers continue to benefit following tax changes, says Tusker

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.”