New benefit-in-kind (BIK) tax rates for ultra-low emission vehicles, due to take effect from 2020, have been dropped from the Finance Bill.

The 15 new bandings, of which 11 were for plug-in cars (sub-75g/km), were confirmed in the spring budget.

However, one of the knock-on effects of the snap election on June 8 is that the current session of Parliament is coming to an abrupt end.

The formal business will stop on Thursday and then parliament will be officially dissolved by the Queen on May 3.

In what is known as the wash-up period, the Commons and Lords decide what bills they want to let through and which they will effectively put on hold.

David Bushnell, product manager mobility at Alphabet, explained: “With the snap General Election announced, the Finance Bill had to be introduced before Parliament is dissolved on 3 May and clearly some things have had to be removed from it in order to avoid the financial wheels of Government grinding to a halt.”

During the Finance Bill committee stage debate yesterday (April 25) the Government cut the wording, reducing the bill from 762 pages to roughly 140, according to the Chartered Institute of Taxation (CIOT).

Optional Remuneration Arrangements (OpRAs), effecting salary sacrifice and cash allowance arrangements, are still included along with Vehicle Excise Duty changes.

But, Bushnell said: “The elements on taxable benefits for ultra-low emission vehicles and first year capital allowances on workplace charging have been cut – amongst a host of other initiatives.

“Only time will tell whether that means these have simply been delayed until the autumn budget or are now up for debate again.”

The industry had pushed hard for the original Finance Bill to be discussed and debated at length so that the implications of the changes proposed were fully understood.

Bushnell concluded: “The concern was that this Finance Bill was a knee-jerk reaction to the issues of a declining tax revenue base and concerns about air quality. Our key message to fleet decision-makers around the UK is for themselves not to make a knee-jerk, short-termist reaction to the Government’s proposed changes.

“Some corporates may be mulling over that offering ‘cash’ to employees is more straightforward, simpler and possibly cheaper alternative to offering a company car. But this views the company car purely as a cost or a ‘perk’ – it doesn’t recognise that a car is often an essential tool which is an investment in the cost of doing business.

“Similarly, for any organisations considering such a move don’t rush into action without expert help and advice. You may find the cash allowances you set actually cost more than a company car programme and incentivise wrong behaviours like over-inflating business mileage and ‘double-dipping’ on travel expenses.

“Don’t under-estimate the benefits of company car schemes to employees and its value for recruitment and retention.”

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