Fleet News

'Budget could see move from company cars'

BUDGET tax changes could increase costs to business if tough new measures trigger an exodus from company cars according to accountant KPMG. KPMG's Birmingham-based automotive division believes Tuesday's statement could re-open the cash versus car debate, heralding a major shift in business car policy.

Automotive consultant James Rodger believes such a shift will force companies into extensive fleet restructuring: 'KPMG computer modelling shows that if an employer gives the full cash equivalent to an employee leaving the company car scheme, it may cost the employer more. Also, larger fleet buyers negotiate directly with the vehicle manufacturers and get good bulk discounts. Fewer company car drivers means fewer cars and less purchasing power.'

Tax partner Ronnie McCombe said perk drivers could well be in the Chancellor's firing line: 'These account for a large percentage of the eight billion miles of unnecessary journeys each year by company car drivers desperate to pass the 2,500- or 18,000-mile tax bands. Faced with a hike in personal tax, many will opt out of their company car schemes and go for personal contract hire or contract purchase.'

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