Fleet News

Cash for cars: Why diesel company cars are here to stay

By Chris Chandler, principal consultant, Lex AutoLease

There has been significant talk about the merits of cash versus car, with the debate recently re-ignited by the Treasury’s decision to overhaul BIK rates.

Indeed, professional services firm KPMG has even gone so far as to suggest that this could cause “a shift away from company cars” post 2016/17 (Fleet News online, September 4).

While sub-75g/km vehicles face an unprecedented 15% hike between now and the 2016/17 tax year, petrol and diesel variants face increases too – albeit at levels to which we are more accustomed.

While it is true that ultra-low-carbon cars will lose much of their cost advantage over a cash alternative, the same is far from true when you examine the prospects for the fleet favourite  – diesel.

Over the past four years (2008 to 2012), BIK on company cars has risen by 3%. In the next four years (2012-2016), the Government has legislated for a 6% increase on petrol and, most tellingly, only a 3% increase on diesel.

For the first time since the introduction of QUALECs (qualifying low emission cars), drivers of diesels can also look forward to a 1% reduction in BIK during 2016/17.

That year, the 2% increase in BIK will apply to all vehicles over 95g/km, but most company car drivers will see this wiped out by the removal of the 3% diesel surcharge. 

What’s more, if the current pace of diesel technology development continues, we can expect CO2 emissions to fall at a faster rate than the increase in tax.

Fleet managers, therefore, could be forgiven for delaying any knee-jerk thoughts of tearing up the company car policy and handing over the reins to payroll and HR.

It is clear there will be no shift away from company cars – only a shift away from certain types of company car. In fact, we would expect the black nozzle on the forecourt to be busier than ever.


Click here for fuel and fuel cards best practice and procurement insight

Leave a comment for your chance to win £20 of John Lewis vouchers.

Every issue of Fleet News the editor picks his favourite comment from the past two weeks – get involved for your chance to appear in print and win!

Login to comment

Comments

No comments have been made yet.

Compare costs of your company cars

Looking to acquire new vehicles? Check how much they'll cost to run with our Car Running Cost calculator.

What is your BIK car tax liability?

The Fleet News car tax calculator lets you work out tax costs for both employer and employee