More than a quarter (27%) of employee respondents who drive a company car are not aware of the tax changes affecting company cars introduced by the government in April 2017, according to research by OSV.
Its survey of 527 company car drivers also found that 46% of those respondents who are aware that changes have been made, do not know exactly what those changes are.
The government limited the range of benefits that attract tax advantages when offered through a salary sacrifice arrangement in April 2017. Arrangements that fall within the scope of the changes include benefits in kind (BIK) with a cash allowance option and flexible benefits schemes with a cash option, referred to as optional remuneration arrangements. There are some exceptions to the changes, such as ultra-low emission vehicles, and company car arrangements entered into before April 2017 will also be protected until April 2021.
The research also found:
- 47% of respondents do not know that BIK stands for benefit-in-kind.
- 22% of respondents state they will not change their choice of company car because of the benefit-in-kind changes.
- 54% of respondents are unaware that making financial contributions to their company car scheme can lower their BIK rate.
- 59% of respondents think company car tax is based purely on the cost of the car.
Andrew Kirkley (pictured), co-director at OSV, said: “There are currently one million company cars in Britain; that presents an awfully big opportunity for the tax man to fill his coffers when inappropriate choices are made.
“In opting for a vehicle with lower emissions, […] [employees are] not just doing a good thing for the planet, but could also be boosting [their] bank balance. If [the organisation] is willing to give a say in the choice of car [employees can] drive for business, it’s well worth shopping around and weighing up all the options. A company car may be an opportunity to get behind the wheel of a vehicle [employees] couldn’t normally afford, but there’s nothing to say that the vehicle must be a gas-guzzler.”