Fleet News

Take care over cash-for-car offers, employers warned

EMPLOYERS must 'tread carefully' when offering drivers a cash-for-car scheme because they will have to provide staff with different allowances to maintain a fair company policy. Tim Ilett, managing director of AutoMGT, told members of the Association of Car Fleet Operators' East Anglian branch that decision-makers should assess the needs of a business before deciding whether or not to offer a cash-for-car scheme.

He said: 'It is a very complex calculation and fleets cannot hope to get it right for everybody — unless drivers are paid different amounts. Do not assume the same calculations work for everyone.' If drivers are to have access to the same cars they must receive the same cash allowance, but many firms use Inland Revenue Authorised Mileage Rates to fund part of the allowance.

IRAMR are a tax-efficient way of reimbursing drivers but too great a reliance on the rates to fund a cash allowance means drivers who clock up higher business miles will receive more money, and therefore have access to more expensive cars. Employers must also be flexible in case employee business miles increase or decrease substantially through changing work patterns.

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