I'm writing to all of our contacts interested in salary sacrifice benefits. 

As you may be becoming aware HMRC are reviewing salary sacrifice and have requested consultation.

We’ve known this was on the cards, the positive news is that salary sacrifice will still be allowed, in fact it's fantastic news, the negative is the government may look to tax salary sacrifice benefits at the same rate as the tax saving (rather than based on CO2 for cars). If this goes ahead then this will reduce the savings on salary sacrifice cars however schemes will still be viable, not just cars but any scheme where the scheme provider has significant purchasing power and discounts. My feeling however, is that the revisions will not apply to cars as they are already taxable and this would remove the incentive to take an electric or hybrid car, cars have been bundled in with everything from iphones to smart tv’s. If the proposals continued as outlined cars would be around 15 - 20% cheaper than retail whether you chose a BMW 3 series or a 330e, currently hybrids can be up to 45% cheaper than retail, the proposals which are deliberately high level and targeted at all salary sacrifice benefits except childcare, pension and cyclescheme.

The fact that consultation is being sought out and that the central government policy of moving people to ultra low emission cars in these proposals has not been considered demonstrates that it’s just a discussion piece with different approaches for different benefits but designed to stop any of the more ‘elaborate’ arrangements such as white goods, PS4’s and even wine (yes I have heard of wine salary sacrifice schemes). The employers NI saving will also be negated but in reality this is not an issue for our customers who never use this scheme to save money. Savings will still be made via volume discounts, low finance rates etc. For most of your employees taking a Qashqai, Fiesta, Astra or similar there would be little change if the changes were adopted as outlined and applied to existing schemes.

I feel it very unlikely that the changes will apply to cars as outlined and even less likely that any changes would be applied to existing arrangements however given the potential impact on the employees, we are making current and potential future customers very aware. 

Customer facing fact sheets are in design and all new prospects and customers plus employees who order will be made aware of the proposed changes and their impact on any order before schemes are set up or orders processed. For employees this will be a ‘worst case’ illustration of the potential change from April.

In summary we will know facts in November, the first time since 2014 we've had absolute facts on the scheme and worst case it will still represent good value for your employees and have less tangible benefits for you so we'd see this as removing reasons to delay launching a scheme rather than introducing reasons and would love to hear from you!

Andy

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