Fleet News

Tax expert advises rethink on traditional fleet cornerstones

FLEET managers should ask themselves some serious questions about their fleet policies over the next few months as traditional cornerstones of providing a company car may need to be killed off.

David Rawlings, senior manager in the automotive sector group of Deloitte & Touche, said he was 'amazed' at the number of companies that had still not even considered ending the offer of free fuel for private mileage to their drivers, despite the immense cost it brings for very little benefit.

The Government is committed to getting rid of free fuel for private mileage and is increasing the tax charge by 20% above the rate of inflation every year. Drivers must now cover almost 10,000 private miles a year just to make free fuel worthwhile, while the employer has to pay ever increasing National Insurance contributions on the costs.

Fleet managers should also carry out regular reviews of their funding policies while assessing other factors that give a snapshot of employees' aspirations combined with the company's motivation, said Rawlings.

'Drivers have changed jobs because of a company's car policy, so if you do not help a driver make a decision, then you could be at risk of losing him altogether,' he said. 'Companies are still finding that the company car is a key method of recruitment and staff retention. A fleet of diesels may get a driver from A to B cheaply, but will the employees be thanking you for your prudence?'

If a company decided to move to a structured personal leasing scheme, he warned they had to be careful to understand exactly what they were doing, including ensuring the scheme was Inland Revenue-approved first to avoid unexpected benefit-in-kind charges.

Rawlings said: 'I have had companies call me saying they have signed up to a structured personal leasing scheme and asking me to explain how it works. Fleets will still be taking on the same cars, but who funds those cars, including the drivers themselves, could change.'

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