Fleet News

Company car drivers head blindly for CO2 tax change

HALF the UK's company car drivers are heading blindly towards the new company car tax system because their employers have failed to communicate the changes, according to new research. A comprehensive survey of 500 company car drivers discovered that 46% did not understand the new carbon dioxide-based benefit-in-kind tax system scheduled for April 2002.

Only 7% of the drivers said the new tax system would prompt them to choose a vehicle with lower emissions for their next company car, despite the new regime being based on a percentage of a car's price determined by its emissions of carbon dioxide - the lower the emissions, the lower the personal tax bill. The research was commissioned by multi-marque fleet finance company Alphabet, and found 62% of company car drivers claimed their employers had not yet communicated with them about the new tax.

Mike Baldry, chief operating officer of Alphabet, said fleet managers were trying to get the tax change message across, but that internal divisions within companies had traditionally given human resource departments the responsibility for communicating payroll and tax changes to staff. 'Companies should look at fleet managers in a more holistic light, in view of the benefits issues surrounding company cars and involve them in the human resource function,' he said.

While 83% of drivers knew a new tax regime was coming into force, their lack of familiarity with its technical details has created a perception among 58% of them that they would be worse off under the new system. If their personal tax does increase, 28% of the drivers said they would order a car with lower emissions next time, 25% said they would have no choice but to accept it, while 20% would examine the alternatives to a company car.

In a worrying development for fleet and human resources departments, a further 10% of drivers said they would try to early-terminate their existing car for one with lower emissions, while 10% would seek an increase in salary to compensate for any increase in their tax bills. When selecting a car under the new tax regime, 26% of drivers said they would not alter their choice, 25% would select a smaller car, 18% would opt out of the company car scheme and 15% would renegotiate with their company to keep the same level of car.

The same survey questioned 159 fleet managers representing fleets of all sizes and strategies, and found very high awareness (97%) and good understanding (82%) of the new tax changes. Only 15% of the sample, mainly larger fleets, believe the changes will cause serious problems within their companies, and 14% think there will be no problem.

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