PVM on Treasury Changes to Salary Sacrifice

16th Jan 2017

Changes to salary sacrifice schemes

Following today’s autumn statement and the recent consultation on Salary Sacrifice and ULEVs, HM Treasury announced that the tax and employer national insurance benefits of salary sacrifice schemes will change. These changes are being made in accordance with the consultation paper previously published except for Ultra-Low Emission Cars, i.e. vehicles defined as emitting less than 75g/km of CO2.

Current vehicles and those contracted prior to April 2017 will continue to operate under the current tax structure. As a result of today’s announcement, Pendragon Vehicle Management expects to see an increased uptake of the SimplyDriveIt salary sacrifice car scheme immediately, so employees can maintain the current tax treatment. When the new tax changes are combined with the new Vehicle Excise Duty from April 2017, considerable savings to the monthly rental will be achieved for employees who contract a vehicle in the next four months.

Regardless of the incoming tax treatment for vehicle salary sacrifice arrangements, Pendragon Vehicle Management can clearly demonstrate that our SimplyDriveIt car scheme still presents enormous benefit to both employee and employer. Employees with a SimplyDriveIt vehicle get the provision of a vehicle and service that company car drivers enjoy, utilising manufacturer discounts on vehicle purchase prices and enjoying corporate service and maintenance costs. In addition, fixed price vehicle insurance for the period of the contract applies, with all these component elements wrapped into one monthly cost.

Pendragon Vehicle Management also welcomes the Treasury’s announcement of £390 million for low emission vehicles and development of connected autonomous vehicles, £80 million to provide charging points for Ultra-Low Emission Vehicles and freezing Fuel Duty for the seventh consecutive year – reportedly saving the average car driver £130 a year, and the average van driver £350 a year.