As EV grants carry the United Kingdom in the 70’s

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It’s my fault. Last year, the Financial Times introduced a new system of salary sacrifice employees to lease and drive an electric vehicle to cheap. The scheme Promises “up to 40 percent” savings. I love a bargain, and although I do not need or I want an EV right now, I intrigued the offer.

After having registered, I connected many fake salary levels to the system, changed my age and altered my address to understand the underlying dynamics of the regime, which also included car insurance. Of course, this activity made me look extremely interested and then I have been plagued by the EV provider who tried to fit in the point line.

After doing the math, the agreement was quite good, although the examples I saw barely worthwhile if you were a regular basic rate or a higher taxpayer. The offer saved a lot of money if the salary was between £ 100,000 and £ 125,140, ​​where people in the United Kingdom lose their personal importance and pay a combined income tax and the national employee’s national insurance rate (the UK Social Security tax) 62 percent. For someone to need to get their salary below £ 100,000 in order to Receive more value in free child careSalary sacrifice schemes like this are no search.

FT would save 15 percent in the lowest national insurance contributions of businessmen and there are also some Value Added Tax Benefits. Employees charge a 3 percent profit on kind of implicit value of the benefit they received instead of paying.

I sent an email to a very representative for whom you could, asking why they could not offer lower prices when there were enormous possibilities for tax avoidance. Not in vain, I didn’t have much joy and they told me, correctly, it would be even better if I registered instead of renting an EV from my fiscal salary later.

What happens? Entrepreneurs save money on payroll taxes, employees receive something of negotiation based on their circumstances, suppliers have a potentially profitable business, and this complicated web supply is subsidized by other taxpayers.

This is an extremely poor example of public policy. Governments have an absolutely legitimate desire to accelerate EV launch, but they should only offer simple discounts, non -opaque and mass subsidies to employers who exploit the company’s imposition rules and extremely high marginal marginal rates in the UK income tax system available only for certain people.

Although EVS is very much the technology of the future, the United Kingdom grant regime is a launch in the 1970’s. At that time, the highest marginal income tax rate was 83 percent of the income obtained. This was charged to the salary levels up to £ 120,000 at current prices. But almost no one paid these types of taxes.

In a Recent analysisDan Neidle, of non -profit tax policies, highlighted the opportunities for tax avoidance of the 70’s. There were lax tax rules in the type of benefits. High winners were regularly paid in other ways, be it business cars, lunch vouchers, club members or extremely generous pensions.

The decades since the decades have seen that governments have been reduced to the lagoons, allowing them to collect more from high income to much lower tax rate.

But in recent years, extreme tax rates have again stormed with the withdrawal of both children’s benefitswhether Personal bonuses at £ 100,000as well as to edge of the Penya -sgate in subsidized daycare.

It is not environmentalism, but the tax that promotes the emergence of EV salary salary offers, fostering a tax avoidance industry that does nothing for Britain’s productivity or public finances.

There are my colleagues with young children who would be better if they were registered in the electric vehicle regime, driving the car on their parents’ driveway and parked it for three years. This is new.

chris.giles@ft.com