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BIK Clarification - HMRC

BIK Clarification - HMRC

(Posted on 19/09/17)

The BVRLA has welcomed recent clarification on how salary sacrifice car schemes should be treated for Benefit-in-Kind (BIK) tax purposes.

HM Revenue & Customs (HMRC) introduced a new tax regime for ‘Optional Remuneration Arrangements’ (OpRA) on 6th April this year, which is applied to cars emitting more than 75g/km CO2 that are provided under salary sacrifice and ‘cash or car’ arrangements. It requires BIK tax to be paid on either the CO2-based BIK value of the car or the amount of salary being given up or sacrificed – whichever is higher.

HMRC has now confirmed that this comparison should only be made against the amount of salary being sacrificed for the car. Additional services, including maintenance, breakdown assistance or insurance, should not be included in the calculation. This has the result of reducing the salary sacrifice and cash allowance figures used in the comparison with CO2-based car BIK value.

“This clarification will give peace-of-mind to employers and leasing companies that are offering or looking to offer this vital employee benefit,” said BVRLA Chief Executive, Gerry Keaney.

“It is good news for the salary sacrifice and company car market, which underpins the UK automotive industry and is responsible for most of the cleanest and safest new vehicles hitting our roads each year.”

Source: BVRLA

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