This is a sample only.

Introduction
This document is a specimen policy statement/ declaration to cover the opting-out procedures and entitlements for employees wishing to opt for an agreed cash amount in
lieu of the provision of a company car with the benefit of private use.

A document of this nature is essential to ensure that the terms and conditions of the optout are clearly stated by the employer, and clearly understood by the employee.


PRIVATE CAR USE – MODEL POLICY

Substitution Of Cash For Cars

PURPOSE
The purpose of this Procedure is to offer a cash alternative to certain staff instead of a Company car. This Procedure does not involve those staff to whom the Company has allocated a Tool of Trade car, van or other light commercial vehicle whether on a pool or individual basis; miles]. In all such cases, employees must use a company car provided under the Fleet Allocation policy and terms & conditions.

QUALIFICATION
To qualify for having the choice of a Company allocated car or of providing their own
private car an employee must satisfy all of the following criteria:
> The employee must be fulfilling a role for which a Company car would normally be allocated
> The employee must have the following valid documents, which must be copied to the Fleet department annually, and otherwise available for inspection subject to a reasonable period of notice not exceeding 48 hours:
> full driving licence, valid in the UK for the type of vehicle used
> MoT certificate (where applicable)
> Vehicle Registration Document
> Vehicle Excise Duty disc
> The employee must own and be the registered keeper of; or lease, the car which they intend to use on Company business
> The car must be covered by a comprehensive policy of insurance, extended to include full cover for business use (ie not simply cover for home-to-office driving)
> The car must be available for the employee to use to undertake business mileage as required

VEHICLE REQUIREMENTS
To qualify for having the choice of providing their own private car an employee’s vehicle
must satisfy the following criteria:
> The vehicle must not be a commercial vehicle, motorcycle or van
> The vehicle must not be over years old at any time in use for company travel
> The total mileage the vehicle has completed must not exceed miles at any time in use for company travel
> The vehicle must have an engine capacity of at least , but not more than

The employee must be able to prove, at any time on demand by the Company, that a comprehensive insurance policy, with extension to cover business use, is in place. A copy of the Certificate of Insurance should be lodged with the Fleet department. If the policy is cancelled or suspended at any time, the employee must report this to the Fleet department with the reason; and must not use the vehicle for business travel.

The employee must be able to prove, at any time on demand by the Company, that, during the period the vehicle has been used on company business, it has been regularly serviced, fully in accordance with the manufacturer’s specification; and in all aspects, complies with all legal requirements.

- The vehicle must have no large or unsightly bodywork damage or rust
- The vehicle must be maintained in a clean and tidy condition
- The vehicle must be suitable for use on Company business and therefore should not be ostentatious, a sports model or similar

Note: In the event of the vehicle concerned being under repair then the employee will be expected to make their own arrangements as appropriate, to fulfil their business travel. Under these circumstances, the Company will continue to reimburse business mileage payments only, provided this is pre-authorised by the employee’s manager.

Note: Any Company owned property carried in the employee’s vehicle is insured by the Company. The employee is responsible for its safe storage during transportation.

Employees are advised to cover their own personal items under their own insurance.

The employee is responsible for all expenses associated with their vehicle excluding business mileage which will be reimbursed via authorised expense sheets at the relevant
rate(s).

The Company reserves the right to decline to offer any employee the choice of cash for cars.

CONDITIONS ON EMPLOYEE
Any allowance will be subject to Company [(including pension)] and statutory deductions as if it were part of normal salary.

Other than on first becoming entitled to a Company car, election for the cash alternative can only be made at the point when the employee’s allocated car falls due for replacement.



In the event that the grade of the employee’s job is changed (for whatever reason) to one which does not carry entitlement to a Company car or if the current entitlement to a Company car in the current grade is removed then the allowance to salary will cease.

In the event that the grade of the employee’s job is changed (for whatever reason) to one which carries entitlement to a Company car of lower cost than that of the current grade then the allowance to salary will be reduced to that applicable to the lower cost car.

In the event that the grade of the employee’s job is changed to one which carries entitlement to a Company car of higher cost than that of the current grade then the allowance to salary will be increased to that applicable to the higher cost car.

CASH ALTERNATIVE
The cash alternative to a Company car will be equal to the budget allowance at the time of making the choice of the car to which the employee is entitled. The method of determining the value(s) of the cash alternatives may vary from time to time in response to external factors such as regulation and/or legislation and/or taxation and/or other factors. Changes will be notified to employees likely to be affected by them.
 
SUBSTITUTION OF CASH FOR CARS
Employee Declaration

I confirm that I have read and understood the conditions of the Company’s Procedure
 relating to “Substitution of Cash for Cars”.

I understand that my job entitles me to a Company car but that, if I wish, I am able to elect to receive an allowance to salary of £xxxx pa in substitution of this entitlement.
I hereby now notify the Company that I elect to receive an allowance to my salary of  xxxx pa in total substitution of my entitlement to a Company car.

I also understand and agree that:

1. the allowance will be subject to Company (including pensions) and statutory deductions as if it were part of normal salary.

2. changes to Company entitlements or administration (in particular to benefit administration) and to statutory, quasi-statutory or taxation regulations will not provide me with the opportunity to reconsider my decision to receive a cash allowance in lieu of a Company car.

3. in the event that the grade of my job is changed (for whatever reason) to one which does not carry entitlement to a Company car or if the current entitlement to a Company car in my current grade is removed then the allowance to my salary will cease.

4. in the event that the grade of my job is changed (for whatever reason) to one which carries entitlement to a Company car of lower cost than that of my current grade then the allowance to my salary will be reduced to that applicable to the lower cost car.

5. the only opportunity to elect to take a cash alternative (other than on first becoming entitled to use of a Company car) will be on the expiry of the lease on the car allocated to me.

I agree that the provisions set out above and those in the Company’s procedure relating to Substitution of Cash for Cars are hereby incorporated as part of my terms and conditions of service.
Signed: ____________________________
Name: _____________________________  Date: __________
Option agreed by Director
Signed: ____________________________
Name: _____________________________  Date: __________