Fleet News

Perk car death leaves fleets a 'soft target' for taxation

A DRAMATIC transformation of the company car from the UK's favourite perk to an essential business tool has made it a 'soft target' for the Treasury, according to new research. The 1999 Lex Vehicle Leasing Report on Company Motoring has revealed a 42% decline in non-essential company cars over the past five years, and a 19% rise in essential company car users.

'The role of the company car as a tax-efficient perk has now been consigned to the past,' said the report. 'Company car drivers see their company car as a necessity for their work and few would willingly forego this benefit. Very few see public transport as a realistic alternative.'

The survey of 1,297 drivers and 386 fleet managers found that 82% of company car drivers believed their car was an essential part of their job and a further 10% saw it as helpful to their job. Such car dependency has left company car drivers as sitting ducks for benefit in kind tax increases, according to Lex. 'This highlights the soft target that company cars represent to the Exchequer,' said the report. 'Company car drivers cannot do their job without their car. Further increases in company car tax will mean higher wage bills, as increasingly employers may feel obliged to compensate their employees for the personal tax bill they face for operating this particular piece of company equipment.'

Lex found that while private car owners annually cover an average of 1,900 miles for work and 6,300 miles privately, company car drivers average 14,300 miles on business and only 5,500 miles on personal trips. These findings help to explain company car drivers' lack of enthusiasm for swapping their cars for a cash allowance, with fewer than 1% of those surveyed taking up the option, despite half being given the choice.

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