The Autumn Budget will pose challenges for the automotive sector, especially with regard to the changes to employer National Insurance Contributions (NICs) and Capital Gains Tax (CGT). With this in mind I have outlined five essential steps for dealers to navigate these changes effectively:
1. Reassess Remuneration Strategies
Employer NICs are set to increase by an average of £900 per employee. Dealers should explore salary sacrifice options, particularly for pensions, and consider tax efficient share incentives for senior staff, which can also improve long-term employee engagement.
2. Review the vehicles you provide to employees and how they are provided
Dealers should review policies considering potential legislative changes around Employee Car Ownership Schemes and twin cab pickups to understand the number of employees who could be affected. Depending on demonstrator vehicle requirements Electric Vehicles (EVs) could offer cost-effective and pain-free solutions with their lower Benefit-in-Kind rates.
3. Improve Business Exit Plans
For those planning a business exit, the current 10% Business Asset Disposal Relief rate applies until next April. If a third part sale isn’t an option, consider a company share purchase or management buy-out, although these require detailed professional advice.
4. Succession Planning
Changes to Business Property Relief (BPR) limit 100% relief to the first £1 million of estate value after April 2026. Dealers should consider trusts, annual gift exemptions and other estate planning strategies now to reduce inheritance tax burdens.
5. Get your house in order
With HMRC recruiting 5,000 new members of staff, it underscores the renewed focus on compliance. Dealers should respond to this by ensuring staff know how to handle high-risk areas, such as VAT on finance transactions, and by leveraging your Dealer Management Systems (DMS) to support compliance and mitigate risks.
Michelle Malone is director at Xeinadin