Existing company car arrangements made before April 2017 will be reprieved from the salary sacrifice changes until April 2021.
But Alastair Kendrick, company car tax expert from MHA MacIntyre Hudson, told AccountingWEB that when people start to analyse this sub 75g window they are going “to be somewhat disappointed” by the Chancellor’s concessions.
Although the anticipated salary sacrifice “shock and horror” had been taken away, Kendrick said the 75g concession will not be significant because “we don't have many vehicles that are within that range at the present time”.
“Some of the hybrid cars are not particularly cheap to buy. So they wouldn't fall to your obvious choice within that type bracket.” He added: “The indication is that the company car tax is generally increasing,” said Kendrick. “So it's not the message the car leasing industry would have wanted.”
The government will introduce 15 bands to categorise company cars and rates from April 2020-21 to “provide stronger incentives” for ULEVs. But the classification of what is an ultra-low emission vehicle will drop from 16% to 2% from 2020. The appropriate percentage for cars emitting greater than 90g CO2 /km will also rise by one percentage point.
Gerry Keaney, BVRLA chief executive, welcomed the government’s recognition that the company car market supports the take-up of ULEVs. “These new bandings will create a much greater incentive for employers and employees to choose the cleanest electric and hybrid cars.
But he added: “These decisions are pragmatic, cost-conscious ones and we are concerned that they may be deferred until the incentives come into effect. The ULEV market could suffer in the meantime as company car tax costs rise significantly between now and 2019.”
The freeze in fuel duty for the seventh consecutive year, however, offered solace to the motorists and company car users who were hit by the Chancellor’s salary sacrifice attack.
“In total this saves the average car driver £130 a year and the average van driver £350,” Hammond explained. “This is a tax cut worth £850m next year, and means the current fuel duty freeze is the longest for 40 years.”
What do you think? Will Hammond’s concessions make any difference?