Press Release

BVRLA responds to key tax policy consultations

Release Date: 

The government has issued consultations on three key areas of tax policy affecting the fleet sector – salary sacrifice schemes, lease accounting and company car tax treatment of ultra-low emission vehicles (ULEVs).

The BVRLA has welcomed the clarity that these consultations provide on the government’s policy positions, and will work with its members to ensure that the fleet industry’s views are properly represented to HM Revenue & Customs and HM Treasury.

Company car tax treatment of ultra-low emission vehicles

HM Treasury is seeking views on how the company car tax system can be adapted to take into account the growing number and variation of ultra-low emission vehicles, while encouraging their uptake.

Commenting on the consultation, BVRLA Chief Executive Gerry Keaney said: “For some time we have been calling on the government to increase the number of ULEV tax bands and narrow the CO2 gaps, so that greater incentives can be provided for those choosing the cleanest vehicles.”

“The government is right to explore whether zero-emission range could be used alongside CO2 emissions to produce a more effective set of company car tax bands, but it needs to ensure that any new system does not become too complicated.”

Benefit in kind tax treatment of salary sacrifice schemes

The government is concerned about the rising costs of salary sacrifice schemes and is considering limiting the Income Tax and National Insurance contribution advantages available through these schemes.

“These schemes offer a valuable way of rewarding and retaining staff, particularly for many public sector organisations who have had to struggle with long-term pay freezes,” said Keaney.

“The vast majority of staff receiving this valuable perk are in the basic income tax bracket and salary sacrifice schemes provide them with a unique opportunity to drive a newer, cleaner and safer car than they would otherwise.

“The new car sales generated by salary sacrifice schemes give a valuable boost to the UK economy and provide a more sustainable alternative to the older, more polluting grey fleet vehicles that staff might otherwise use for business travel.”

Tax changes for new lease accounting rules

The government is seeking views on how new lease accounting rules will impact the tax treatment of leased assets, and how tax legislation will need to adapt.

“We will be working closely with HMRC to ensure that these long awaited new lease accounting rules result in a simpler and fairer tax treatment of leased assets, particularly for low emission vehicles that should be entitled to enhanced first-year capital allowances,” added Keaney.