New BiK tax changes dropped in ‘rushed’ Finance Bill

fleet budgetNew benefit-in-kind (BIK) tax rates for ultra-low emission vehicles, due to take effect from 2020, have been dropped from the Finance Bill.

The 15 new bandings, of which 11 were for plug-in cars (sub-75g/km), were confirmed in the Spring Budget.

The decision to hold a snap election on 8 June means ministers are having to rush through legislation before parliament closes for business, and as a result ministers have effectively ditched the majority of the finance bill in a bid to ensure it gets through.

In what is known as the wash-up period, the Commons and Lords decide what bills they want to let through and which they will effectively put on hold.

During the Finance Bill committee stage debate yesterday (April 25) the Government cut the wording, reducing the bill from 762 pages to roughly 140, according to the Chartered Institute of Taxation (CIOT).

Optional Remuneration Arrangements (OpRAs), effecting salary sacrifice and cash allowance arrangements, are still included along with Vehicle Excise Duty changes, yet the elements on taxable benefits for ultra-low emission vehicles and first year capital allowances on workplace charging have been cut.

The industry had pushed hard for the original Finance Bill to be discussed and debated at length so that the implications of the changes proposed were fully understood.

As fleet management specialists, Fleetdrive would like to urge fleet decision-makers not to make a knee-jerk reaction to the Government’s proposed changes and rush into action without expert help and advice.

In the short-term it may seem that offering ‘cash’ to employees is more straightforward, simpler and possibly cheaper alternative to offering a company car, but cash allowances can actually cost more than a company car programme, and frequently incentivise wrong behaviours like over-inflating business mileage and ‘double-dipping’ on travel expenses.

Speak to our experienced fleet advisors for guidance on 01628 899720.