The government has released draft legislation to include costs connected with company cars and vans, such as vehicle maintenance and insurance, within the scope of Optional Remuneration Arrangements (OpRA) rules for tax and National Insurance contribution (NIC) purposes
HMRC has released draft legislation to ensure that OpRA rules work as intended after several anomalies were pointed out.
The new legislation ensures that the value of the amount foregone includes any amounts given up in respect of connected costs, this includes insurance, breakdown recovery costs, maintenance etc. Under the provisions of the current OpRA legislation, the value of any connected costs is not included when calculating the value of the amount foregone for a taxable car or van.
It also aligns the approach with the car benefit charge which makes provision to adjust the level of a capital contribution if the car is made available for only part of the tax year.
These measure will become effective from 6 April 2019.
The changes to OpRA rules are only expected to have a negligible impact on the Exchequer and will only affect a snall number of the one million individuals who are provided with a company car or van.
The measure will only affect those businesses who are not paying the correct amount of employer NICs because they are using separate arrangements for connected costs or who have not adjusted the treatment of capital contributions to reflect part years.
Policy paper: Changes to Optional Remuneration Arrangements rules for taxable cars and vans issued 6 July 2018.
Report by Amy Austin
