For the unprepared fleet manager, this could mean huge early termination charges repeatedly taking a chunk out of their fleet budget during the year.
The warning was sounded by Phil Redman, fleet manager for IBM, who found his firm facing a massive early termination charge after a senior executive resigned six months after taking an expensive off-road vehicle costing £45,000.
The firm has an intranet site on which early termination vehicles are offered to other members of staff, and in most cases it is successful. But because the diesel would be taxed at 35% of list price under the new benefit-in-kind tax regime from 2002, drivers shunned the model for something less expensive.
Redman said: 'Drivers realised the taxable benefit for the car was £17,000 for higher rate taxpayers and no one wanted it, so we had to take a £10,000 early termination charge. Companies have to debate the cost of the car to the individual, but also the cost to the company if that employee leaves.'