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1, London Street, Reading, RG1 4PN t: 0118 951 6200 f: 0118 950 2704 www.fsp-law.com
Automotive Quarterly updateFebruary 2017. Automotive companies have featured heavily in the news since the last quarterly went to press.
Much of that news focused on risk and regulatory issues - ongoing investigations into bribery and corruption persist in
Germany, EU guidance has been released to help Member States evaluate if car manufacturers use defeat devices and,
perhaps most significantly to readers of this quarterly, there has been a sustained assault on the diesel engine (which
make up nearly one half of EU car sales). That is:
Sadiq Khan wants to ban them from London (and Paris, Mexico City, Madrid and Athens are set to do likewise)
Chris Grayling, Transport Secretary warned, last week, against buying a diesel vehicle; and
The governments chief medical officer, Dame Sally Davies, said on Radio 4s Today Programme that diesel cars
should be phased out to cut the tens of thousands of deaths caused each year from air pollution.
Diesel car sales are suffering. Official figures stated that 78,778 diesel cars were sold in January 2017, a drop of 4.3% on
the same month last year.
In response, Mike Hawes of the SMMT pointed out that the way to address the issue of diesel air pollution was to make
diesels cleaner, not ban them from cities or phase them out altogether:
The diesel engines of today have got immeasurably cleaner than those of yesterday What we need to do is continue to
improve them so that you can address the NOX emissions in the same way that weve addressed the particulate emissions,
sulphur emissions, lead in petrol and so forth its an evolution in technology The challenge to the industry is to get the
newer vehicles on the road as quickly as possible.
One thing is for certain, whilst environmental issues are not likely to feature highly in the USA under the Trump
administration, the position in the EU is in stark contrast and it seems likely that the microscope will stay on the diesel
engine for some time yet.
Finally, given that a recent survey found that the majority of consumers werent aware of changes to the new car VED
regime coming in April, now seems a timely reminder to all dealers and related parties that under the new system, two
thirds of the AFVs that currently qualify for the 0 standard rate will now be subject to an annual flat rate charge of 130, in
addition to varying levels of first year tax. Meanwhile, those with list prices above 40,000 which will include some of
these new technology vehicles will also have to pay an annual 310 premium car surcharge.
As ever, I hope that the content of this quarterly (which focuses on recent regulatory issues and the issue of salary
sacrifice) are of interest and if there is anything you would like to see covered off in the next quarterly, please do call or
email the writer, firstname.lastname@example.org.
Readers may be aware that the Competition and Markets
Authority (CMA) was planning to investigate allegations that
BMW UK was restricting its dealers' use of the price
comparison website to list new BMWs and MINIs.
The investigation was proposed after carwow made a
complaint to the CMA in 2016. However following carwow's
referral BMW announced that it had changed its UK policy and
so the CMA decided, in January 2017, not to pursue the matter
Although the case has been dropped without the CMA making a
decision as to whether BMW's policy breached competition law,
it seems that car manufacturers have to accept that price
comparison websites have a place to play in the market as they
help to promote competition by allowing consumers to
compare the prices for new cars offered by different dealers
rather than having to spend time travelling around and
negotiating with individual dealers.
If you would like further advice on the above please do not
hesitate to contact Cathrine Ripley.
(DDI 0118 951 6285/ email@example.com).
For the purposes of the new rules, ULEVs are vehicles with
emissions under 75 grams of CO2 per kilometre. The emission
level for exempt ULEVs may be updated in future, to be
consistent with any changes to the treatment of these vehicles
within the car benefit charge.
Options before 5 April 2017
It is anticipated that there will be a huge rush in salary sacrifice
car benefit tax up between now and 5 April, when the new rules
come into force.
Anyone taking a new salary sacrifice car in the period up to 5
April 2017 will have the arrangement protected until 2021. But
from 6 April 2017 new agreements for salary sacrifice can only
gain tax benefits if the car has ultra low exhaust emissions.
If you would like further advice on the above please do not
hesitate to contact Philippa Roles.
(DDI 0118 951 6371/ firstname.lastname@example.org).
Price comparison websites for
new cars are here to stay
As we say goodbye to salary sacrifice incentives making company
car ownership tax effective, we welcome in an era of increased
tax incentives for leasing ultra low emission vehicles.
Up until now, the use of salary sacrifice arrangements in
employment has enabled employers to give their employees a
little something extra in the form of tax effective purchases of
every day items. Salary sacrifice arrangements enabled an
employee to surrender part of his salary in return for a non-cash
benefit, such as a leased company car. The tax effectiveness of
the arrangement was achieved by taking the cost of leasing the
car from the employee's gross (pre-tax) salary, thereby reducing
the amount on which income tax and National Insurance was
The scheme has benefitted thousands of drivers, but soon will be
no more. In the 2016 Autumn Statement the Government
employees swapping salary for benefits will pay the same tax
as the vast majority of individuals who buy them out of their post-
So with that the Government will be removing the tax and
employer National Insurance advantages of salary sacrifice
schemes from 6 April 2017.
The only areas of the old salary sacrifice arrangements that will
remain unaffected by the culling are arrangements relating to
pensions, childcare, Cycle to Work and Ultra Low Emission
Current salary sacrifice contracts where the arrangement does
not relate to cars and/ or accommodation and/ or school fees will
be allowed to continue operating under the pre-April 2017 rules
until the earlier of:
(i) the contract end date;
(ii) the modification of the contract;
(iii) the renewal of the contract; or
(iv) April 2018.
In the case of salary sacrifice arrangements for cars and/ or accommodation and/ or school fees the April 2018 cut-off is extended to April 2021.
Company cars & the end of salary
The automotive industry can be a stressful environment.
When performance, misconduct and other workplace disputes occur it
is not uncommon for the employees involved to be signed off with
stress. These employees will qualify as disabled and be protected
from discrimination if they can show they have a mental impairment
which has a substantial and long-term adverse effect on their ability to
carry out normal day-to-day activities.
A recent case in the Employment Appeal Tribunal (EAT) offers helpful
guidance on when stress might amount to a disability.
The case concerned an individual who was on long-term sick leave due
to workplace stress. He brought claims alleging disability
discrimination by his employer, relying on stress to establish a
disability. An employment tribunal determined he was not disabled and
the claimant appealed.
The EAT upheld the tribunals decision. Focusing on stress, it echoed
the tribunals findings that his stress was largely a result of
unhappiness about what he perceived to have been unfair treatment
and that he had provided little or no evidence that his stress had any
effect on his ability to carry out day-to-day activities. It held that he had
failed to establish that he was disabled as he did not establish a
mental impairment nor the requisite substantial long-term adverse
The EAT explained that there is a distinction between a clinical mental
impairment and what is simply a reaction to life events.
Automotive employers across the industry will welcome this decision,
which confirms that the burden rests with employees to show that
their work-related stress has a substantive and long-term adverse
impact on their day-to-day activities. The decision also suggests that
without appropriate supporting evidence, a doctors note referring to
stress will not on its own be sufficient to establish a disability.
However, employers should still be proactive wh