Research by a UK human resource consultancy suggests company car drivers would pay an extra £600 per year in tax to keep their company car.
This is the 'emotional' value of a company car that employers have to overcome if they want to incentivise staff to select a cash-for-car option, according to the Hay Group. Its findings indicate that the vast majority of drivers would not accept a cash alternative that merely kept them in a tax neutral position, but instead would require a financial 'sweetener' to compensate them for the loss of the peace of mind of a company car.
"About 85% of employees would be prepared to pay something for the emotional premium of having a company car," said Steve Watson, director of reward expertise at the Hay Group. His research found 10% of drivers would pay more than £1,000 to keep their company cars, 45% would pay an additional £500-£1000, 30% would accept a tax increase of up to £500, and only 25% of drivers would accept no increase in tax before moving out of their cars.
The survey found a strong correlation between the popularity of a company car and the geographical location of the driver. In London, 70% of drivers took the cash, but outside London 95% opted for the car. The reasons for taking cash ranged from no need for a car, the desire for a greater choice of car than that offered by a fleet choice list, and even the wish to avoid having to report embarrassing motor accidents to the company. (October 5, 2001)