Transfer pricing relates to the definition of terms and conditions (including prices) for transactions or dealings between related parties concerning goods, services, intangibles and finance.
Following on from my recent blog on the benefits of offering employees low emission electric cars, the Government has just announced plans to accelerate (excuse the pun) the take up of electric vehicles.
The change means that for 2020/21 there will be a 0% benefit in kind rate for zero emission company cars, moving to 1% for 2021/22 and before returning to the previously announced rate of 2% from 2022/23. The significance of this cannot be understated, employees being provided with an all-electric company car next year will not be subject to a tax charge on the provision. Similarly, employers will not be liable for any Class 1A NIC charge on the provision.
To give this some context, in 2020/21 employees provided with a zero emission company car can have all their motoring costs met by their employer with no charge to income tax, including fuel costs if employers were to provide at work electric charging points.
Employers considering implementing a low-emission car salary sacrifice, the newly announced changes make the savings for both employee and employer even greater.
The Government announced a benefit in kind rate reduction for company cars first registered after 6 April 2020 with WLTP CO2 emissions below 95g/km. The existing proposed rates for these cars will reduce by a further 2% in 2020/21 and 1% in 2021/22 before returning to the existing rates for 2022/23.
PKF Francis Clark provides support at all stages of salary sacrifice implementation covering five distinct phases:
- Scheme design
- Documentation drafting
- Employee communications
- Updating HR and payroll processes
- Payslips and obtaining clearance from HMRC
For further information, please contact Scott Campbell (employment tax senior manager)
T: 01752 301010