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Myths around the recent changes to Car Benefit Schemes

Myth Busting!

Myth #1 - ‘salary sacrifice schemes have been scrapped by the Government’
This one is plainly not true, as all that has changed is the tax treatment. The Government has approved car benefit schemes and it's business as usual for Tusker.

Myth #2 - ‘prices go up for all employees’
Around half of the salary sacrifice drivers currently in schemes are in cars that would not be affected by the new rules, either because they have opted for a ULEV or because the drivers are already paying more in gross Benefit in Kind (BiK) than the gross salary being sacrificed. For the rest, over a quarter will see an average increase of less than £2.50 per month.

Myth #3 - ‘there are no longer any financial benefits for employees’
There are still huge savings to be made with NI savings, pension savings (where applicable) and manufacturer discounts.

Myth #4 - ‘there are no longer any National Insurance savings for employees’
The truth is that NI for employees is NOT affected by the new rules. NI savings remain for all employees.

Myth #5 - ‘it is more expensive for employers to run salary sacrifice schemes’
All Tusker schemes are free to implement, and there is still no financial cost to implement or run a salary sacrifice car scheme.

Myth #6 - ‘salary sacrifice car schemes are no longer a great benefit for employers to offer’
Cars remain a fantastic benefit of employment and Tusker has seen many new schemes open since the tax treatment was clarified in the Autumn Statement.

Myth #7 - ‘only ULEVs are available through such a scheme’
The savings for ULEVs are greater under the new salary sacrifice rules, but drivers can continue to choose any car, make or model with varying savings depending on their own circumstances and the CO2 rating of the vehicle.

Myth #8 - ‘salary sacrifice will be abolished in 2021 so it’s not a long-term solution’
The 2021 date simply refers to when the rules will apply to renewals of existing schemes. The Government has always applied a ‘grandfather clause’ to tax rules in order to maintain the status quo for existing agreements.

Myth #9 - ‘all employers will stop making pension contribution savings’
Where applicable, pension contribution savings remain as they are not affected by the changes.

Myth #10 - ‘renewals will be affected immediately by the new rules’
All orders with agreements signed (including digitally) before April 6th 2017 will be treated under current rules. Only orders, or renewals, signed after then will be treated under the new rules. As market leader, Tusker have been heavily
involved with the lobbying of Government prior to, and during the consultation, and will continue to be involved as legislation is implemented in order to achieve the very best outcomes for organisations and employees.


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