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The new WLTP emissions test regime only applies for cars registered on or after 6 April 2020. Pages 14–16 of the summary of responses to WLTP (http:// bit.ly/2Onub5f) show the relevant rates based on the date of registration of the car. ...when the car was registered and when the OpRA was entered into... Q: We know that cars are protected from optional remuneration arrangements (OpRA) until April 2021 unless there is a change to the vehicle, a variation to the terms of the contract or if the car has a CO2 of 75g. How would OpRA be affected on the following scenarios? (i) The employee has a company car under a salary sacrifice arrangement, and it is changed within year to a car with CO2 emissions of less than 75g/km. Would this still be protected due to the car’s CO2 emissions or because there was a change to the vehicle would the OpRA rules now apply? (ii) The employee has previously given up the right to car allowance for the benefit of a car which has CO2 emissions of less than 75g/km. Mid-year, the employee changes the car to a car with the same CO2 emissions. Would this mean OpRA would now apply (due to the change), or because of the CO2 emissions remaining below 75g would this still be protected? (iii) A person has a company car and has done so without the offer of a cash alternative. Mid-year, the company offers the employee a choice of keeping the car or receiving a car allowance. The allowance was not previously offered at the time the car originally was. Would OpRA now apply as a cash alternative has been offered? If so, how would this be proportioned for reporting purposes? (iv) We know that when a car is currently being impacted by OpRA and when a change happens mid-year, the amounts are proportioned to the time the car has been available. Would the same process apply for when OpRA didn’t apply but
test procedure (WLTP) on vehicle taxes which are linked to carbon dioxide (CO2) emissions. This followed the 2017 autumn Budget where it had previously been confirmed that cars registered from April 2020 will be taxed based on WLTP figures. It is believed that WLTP will be more representative of real-world driving conditions, compared to the previous test known as the new European driving cycle (NEDC). The result of this change means that it is likely that emissions would increase which would impact vehicle excise duty (VED) and company car tax. The Review of WLTP and vehicle taxes was published on 19 December 2018 with the consultation closing on 17 February 2019. The government has since published a summary of responses (http://bit.ly/2Onub5f) confirming the following: ● ● the existing VED rates will be maintained on introduction of WLTP from April 2020 ● ● a call for evidence will be published later this year seeking views on moving towards a more dynamic approach to VED which recognises smaller changes in CO2 emissions ● ● most appropriate percentages will be reduced by 2ppt in 2020/21 before returning to planned rates over the following two years – increasing by 1ppt in 2021/22 and 1ppt in 2022/23. This applies to company cars first registered from 6 April 2020 ● ● all zero-emission company cars will attract a reduced appropriate percentage of 0% in 2020/21, 1% in 2021/22, before returning to the planned 2% rate in 2022/23. In response to the increasing number of queries being received from members, the CIPP advisory team recently posed several questions regarding these changes and received responses from HMRC: Q: With the changes to how cars are being tested and some vehicles being re-tested for their CO2 emissions, when it comes to working out the value of the vehicle, which figure would you use? The new CO2 value or the original as stated on the registration document? This will also affect fuel charges so would have a big impact if the new CO2 was to be used.
then did? (For example, April–June no effect of OpRA so the value of the car is reported. July–March, OpRA applies, therefore proportion the amount of ‘cash’ given up that same period the new car was available? In response, HMRC focuses on when the car was registered and when the OpRA was entered into: ● ● OpRA entered into on or before 5 April 2017 – Regardless of when the car was delivered, the OpRA rules do not apply, unless there is a variation or renewal (including automatic renewal) of the arrangement, at which point the new rules apply from the date of variation or renewal (see below). The CO2 emissions are based on the traditional (NEDC) emissions test values, and will continue to do so, even after 6 April 2020. ● ● OpRA entered into on or after 6 April 2017 but on or before 6 April 2021 – car registered on or before 5 April 2020 – For cars with NEDC emissions of CO2 75g/ km or less, there is no impact from OpRA. For cars with emissions of CO2 76g/ km or more, the OpRA rules apply. The CO2 emissions value is based on the traditional (NEDC) emissions test values, and will continue to do so, even after 6 April 2020. ● ● OpRA entered into on or after 6 April 2017 but on or before 6 April 2021 – car registered on or after 6 April 2020 – For cars with WLTP emissions of CO2 75g/km or less, there is no impact from OpRA. For cars with emissions of CO2 76g/ km or more, the OpRA rules apply. The CO2 emissions value is based on the new (WLTP) emissions test values. ● ● All OpRAs from 6 April 2021 – All ‘grandfathering’ ends for pre-6 April 2017 OpRA cars with NEDC emissions of CO2 76g/km or more. Cars with emissions of CO2 75g/km or less (NEDC if registered on or before 5 April 2020, or WLTP if registered on or after 6 April 2020) are not impacted by the OpRA rules. n Have your say As ever your experience and views gained ‘at the coal face’ are vital and we value hearing from you at policy@cipp.org.uk .
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Issue 55 | November 2019
| Professional in Payroll, Pensions and Reward |
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