Recently announced benefit-in-kind (BIK) tax rates are set to significantly enhance salary sacrifice schemes, following delays in car orders by some drivers.
New Tax Rates Offer Long-Term Certainty
Company car tax rates, released by the Treasury on Wednesday (October 28), extend the current tables through to the 2030/31 tax year. They will rise by just one percentage point to 10% for zero-emissions cars. Make us your preferred source on Google Grosvenor House Hotel, Park Lane, London ENTER NOW – entry deadline is November 20th.
John Peters, head of sales for large corporate and international at the vehicle leasing company Arval, called the five-year rate forecast significant. He said the minimal BIK increase was important.
“Like others across the industry, we believe that BIK needs to rise in a measured manner in order to encourage ongoing fleet electrification,” he said.
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Peters noted that the widespread switch to electric cars in recent years has been driven by low employee taxation. The one percentage point increase is therefore “extremely welcome.”
Delaying Orders Over Tax Uncertainty
Peters described the certainty over tax rates as a “boost.” He said it allows companies to tell drivers that new company cars ordered today will enjoy historically low tax throughout a typical four-year lease. Table bookings: ensure you are part of the Fleet News Awards 2027.
Before the new rates were published, the fleet sector had called for clarity. This was due to salary sacrifice orders being delayed while companies waited for the tax picture to become clear.
Toby Poston, chief executive at the British Vehicle Rental and Leasing Association (BVRLA), said some members were seeing apprehension from potential salary sacrifice customers. This was due to a lack of clarity on long-term tax rates.
“Some are delaying orders until they know where their commitments will sit across the entire agreement, not wanting to see tax goalposts shift halfway through,” he said.
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Employers Hesitant to Launch New Schemes
Peters stated that some companies were not just holding back on orders. They had also set aside proposals for introducing new salary sacrifice schemes altogether.
“We are certainly aware of employers who had put plans to offer salary sacrifice schemes to their employees on hold until more information about taxation was available,” he added. “Now that we know more about future BIK, they are likely to proceed.” Call Sandra Evitt on 01733 468123 or email [email protected].
Although BIK was the most consequential area for fleets in the Budget, there was other good news. Peters mentioned the continuing fuel duty freeze, which he called a positive.
He also noted the usefulness of receiving further details about how electric vehicle excise duty will work. This came alongside confirmation of the UK’s adoption of Euro 7 regulations. Gareth has more than 30 years’ experience in journalism having started his career in local newspapers in the 1990s. Prior to joining Fleet News in 2008, he worked in as a media advisor and has been news editor at Fleet News since 2010.
