23rd July 2018

On Friday 6th July, the UK Government published its draft legislation for the UK Finance Bill 2018-19. The Bill renews annual taxes, maintains administration of the tax system and delivers new proposals over an array of topics across personal, business and indirect tax, as well as stamp duty and anti-avoidance.

HMRC will publish most legislation in draft form for consultation before the relevant Finance Bill is laid out. The consultation on the draft will run until Friday 31st August to be announced in Parliament during Chancellor Philip Hammond’s upcoming budget in the Autumn. Any changes will then take effect from April 2019.

Amongst the various suggested reforms are changes to Optional Remuneration Arrangements (OpRA) rules, particularly for company cars and vans which are provided to employees through a salary sacrifice arrangement. The proposed changes aim to ensure that when a car or van is provided by an employer to an employee through salary sacrifice, the taxable amount will now include costs connected with the car or van such as insurance and maintenance, which are regarded as benefits in kind (BIK) under normal rules.

In addition, the changes adjust the value of any capital contribution towards a taxable car when the car is made available for only part of the year.

Lee Muter, Employment Taxes at UNW, said: “The proposed changes to OpRA are an admission by HMRC that the original tax legislation contained a drafting error, under which the Treasury could still be losing tax and NIC from a salary sacrifice using a car or a van. It is interesting that they have moved to close this so quickly and could lead to some unwelcome additional tax liabilities for any employees who have taken a new car under salary sacrifice from April 2018.”

For more information regarding our employment taxes services, please visit our employment taxes page or you can contact Lee Muter at leemuter@unw.co.uk or on 0191 243 6089.

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