Salary sacrifice car scheme experts, Fleet Evolution, have spoken out about the rumoured government ban on salary sacrifice – after a former pensions minister suggested that the new Conservative government could use the schemes to recoup lost tax revenue.
Steve Webb, a former Liberal Democrat MP, has stated that the government might be tempted to attack salary sacrifice in an effort to bolster national insurance contributions (NIC), after they already ruled out increases to income tax and VAT.
But the team at Fleet Evolution, one of the UK’s fastest-growing providers of salary sacrifice car schemes, believe the government will shy away from banning the schemes, as they actually offer benefits for the Treasury.
Andrew Leech, Director of Fleet Evolution, says, “There are lots of rumours flying around about the government, with many experts suggesting that salary sacrifice schemes might be a real target for cuts in first Budget of the new term. Here at Fleet Evolution, we are very confident that this won’t be the case. Salary sacrifice schemes are not tax-negative, and they do actually provide value and benefits for the Treasury – the money the government would gain through NIC would actually be offset by revenue lost in other areas, such as the VAT due on disposal of vehicles when they’re no longer of use.”
Many other experts have also agreed that a ban on salary sacrifice could well be unenforceable, as they usually take the form of private contracts between employers and employees. Both must agree the changes to the terms of the employee’s contract – and if a rule banning the schemes would be incredibly difficult for the government to actually draft without infringing on personal rights.
Salary sacrifice schemes have been incredibly popular with many employees over the last few years – Fleet Evolution itself saw its strongest ever quarter earlier this year, with more take-up of the schemes than ever before.
If the government were to clamp down on these schemes – which also cover things like childcare, cycling schemes and other benefits – businesses all over the country would need to seriously rethink their benefits packages for employees. The ban could result in upheaval for many of the country’s most successful businesses – something that will not endear the current government to the UK’s business leaders.
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