ACFO raises concerns over fleet sector tax consultations
ACFO has responded to the opening of three consultations on fleet sector tax-related issues, highlighting its concerns over a number of areas.
Announced last month, the consultations cover key fleet areas on lease accounting, company car tax for ultra low emission cars and salary sacrifice schemes.
In particular, ACFO has voiced its concerns over how proposed changes to salary sacrifice could impact on existing schemes and has already met with HMRC officials to discuss this.
Responding to the ‘Consultation on Salary Sacrifice for the Provision of Benefits-in-Kind’ document, which explores the potential impacts on employers and employees should the government decide to change the way the benefits code applies when a benefit-in-kind is provided in conjunction with a salary sacrifice or flexible benefit scheme, chairman John Pryor said: “We have real concerns about introducing a change of this magnitude without mentioning any ‘grandfathering’ in relation to existing salary sacrifice schemes. It would be unfair on drivers to force cost increases part way through a contract period.
“ACFO is concerned about the timescale of the introduction of any changes if current rules are altered. Many companies will struggle to make changes for salary sacrifice car schemes by next April.
“What’s more, employers with active salary sacrifice schemes and their employees potentially face unknown risks as vehicles are being ordered now and over the coming months without knowledge of what may happen in the future. There are a lot of issues and companies must assess the potential impact.”
Furthermore, salary sacrifice car schemes typically favour the uptake of low emission vehicles thus any move to limit demand could impact on government measures to further encourage take-up of low carbon dioxide (CO2) emitting models and mean some employees continue to drive older privately owned vehicles.
Pryor said: “We know that salary sacrifice schemes have been very successful in introducing low CO2 cars to employees – whether they previously had entitlement to a car or cash allowance – and that when no scheme is available, the private car driven typically has higher emissions CO2.”
Simultaneously the government’s ‘Company Car Tax for Ultra-Low Emission Cars’ consultation document specifically seeks views on the design of Benefit-in-Kind tax bands for ULEVs from 2020/21 onwards to help further drive up demand.
The document outlines how existing CO2-based company car benefit-in-kind tax bands could be restructured with the potential to further differentiate between ULEVs by how many zero emission miles a vehicle could travel.
Pryor said: “What the Government is proposing makes logical sense. However, ACFO’s major concern is that just as the current tax system is straight-forward to understand and administer that must be the case with any revisions. If a mileage element is introduced it must be fair and sensible.”
He added: “At the meeting HMRC made it clear that it wanted to hear the views of individual fleet managers as well as company car drivers and not only those of trade associations such as ACFO. We are therefore asking our individual members to respond to the consultation documents.”