Fleet News

Cash for car values stagnate

THE value of cash alternative payments to employees who opt out of the company car have been stagnant for up to three years. Figures from the 2001 Company Car UK report from Monks Partnership suggest that, 'apart from at the most senior levels, the value of cash alternatives do not appear to have increased significantly over the past two or three years'.

And reductions in the Inland Revenue Authorised Mileage Rates from April 6 next year could see thousands of people who have opted out of company cars lose out under reimbursement for business miles clocked up in their own cars. The failure to increase allowances would appear to support survey findings that two of the major aims of businesses buying out company cars is to make the move cost-neutral to themselves or to reduce company costs. Report editor David Atkins: 'I am trying to persuade companies to look at the value of the cash allowance to the employee in line with taxation changes post-2002 because it will change.'

He added: 'Companies are moving out of cars for cost reasons and the complexity of running a fleet. But the winners are not always the employees. If schemes are well structured, employees should be no worse off.' Companies which have decided to eliminate car fleets will typically offer staff 45%-50% of the capital cost of their company car to 'buy-out' the benefit, says the report. Of the 73 companies surveyed with a turnover of £500 million-£3 billion - a total of 198 companies were surveyed for the report - the annual value of cash allowances for directors was £10,200 on average, for senior managers it averaged £8,400, middle managers an average of £5,900 and for employees eligible for 'minimum status cars' it was £4,100.

Meanwhile, the number of companies offering employees a cash-for-car option has reached 74% of those surveyed - up from 70% last year and 55% in 1995. The survey says about 40% of companies report a take-up rate of 20% or more, although the number of firms reporting a nil take-up rate below director level has reduced.

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