AM Online

The company car strikes back

The company car will make a major comeback in the next few years as duty of care concerns and Government measures increase its attractiveness.

Despite HM Revenue & Customs statistics that the number of benefit-in-kind tax-paying drivers has dropped by more than 300,000 to 1.3 million over the past four years, senior industry figures believe this could be the low point, as employees swarm back into company cars.

In a major report by financial services giant Deloitte, entitled Goodbye Company Car? Alison Chapman, head of automotive tax at Deloitte, said: "In the future, the company car will not be confined to the scrapyard.

"The Government has made it clear that it wants the company car to remain a key part of the corporate landscape."

Vehicle management firm Leasedrive Group’s commercial director Roddy Graham believes 2006 will be the year of the company car, with a ‘significant’ swing back from opting out.

He said: "First, companies are becoming increasingly aware of their duty of care responsibilities.

"Fuelled by concerns over potential corporate as well as individual director liability, companies are favouring a return from employee car ownership schemes (ECOPS) and cash-for-car schemes to operating company cars."

Both agree that well-managed opt-out schemes have a role to play in the workplace, but that for many the company car offers a guarantee that at-work drivers have properly maintained and insured vehicles.There are also concerns that the Treasury will act to level the playing field in order to reclaim lost tax revenues from opt-outs.

#AM_ART_SPLIT# Graham said: "The Government will inevitably try and claw back lost revenue from benefit-in-kind (BIK) payments from the company car."

In 1999/2000, the Government received £1,850 million from company car drivers while the latest figures show only £1,640 million being collected by HMRC.

Graham added: "The Chancellor could make a frontal attack on opt-outs in some way, levying a form of disincentive, which could draw users back to the revenue-generating company car."

Writing in Goodbye Company Car?, Professor Peter Cooke agreed that the Government would act to protect its tax revenues.

He said: "I think the Government may look at both the rise of cash-for-car alternatives and ECO schemes and try and find ways to push employees back into company cars."

However, Chapman warned that there was no one-size-fits-all solution to fleet funding.

She said: "Flexibility in the provision of corporate transport solutions has become crucial to both companies and their employees, but both parties have frequently failed to analyse in detail the full implications of opting out or staying loyal to the company car.

"This is because the issue is far from a straightforward decision. Too many companies have tried to treat the choice as an either-or option and, as a consequence, have paid the price in terms of rocketing costs, administration overload and disgruntled employees."

  • Copies of the Goodbye Company Car? report are available at £225 from www.cartax.co.uk.
  • If you are not a registered user your comment will go to AM for approval before publishing. To avoid this requirement please register or login.

    Comment as guest


    Login  /  Register

    Comments

    No comments have been made yet.