Fleet News

The big fleet panel

THIS week Fleet NewsNet launches a new concept to give fleet decision-makers an exclusive voice in the newspaper and the wider fleet industry.

Each week via e-mail Fleet News will ask a dedicated Fleet Panel one question, designed to gauge opinion on a key company car or van issue among executives at the sharp end. The question this week was: 'Will the new CO2-based company car tax reduce the appeal of the company car to employees?'

The response was an emphatic 'no' from 71% of the panel, although this still leaves 29% who think the change to an emissions-based company car tax, and in particular the abolition of business mileage tax breaks, will reduce the appeal of the company car.

Many respondents identified the need for drivers to select lower emission cars and many have already seen their drivers take steps in this direction.

Several Fleet Panel members pointed out that the perk car drivers in their fleets stand to gain most, underlining the Inland Revenue's forecast that as many as 200,000 employees may opt back into company cars, swapping their cash allowances for a low-emission, tax-efficient 'perk' car.

Some decision-makers have already experienced a decline in the number of cars on their fleets due to the tax changes, and high business mileage drivers (especially those with an appetite for higher emission cars) are feeling the heat of the disappearance of mileage tax breaks.

##Yes Jan 2002--left## ##No Jan 2002--right##

'Will the new CO2-based company car tax reduce the appeal of the company car to employees?'

'No. The 'benefit car' users are much better off, so they are happy, in fact more benefit users are wanting to join the scheme from April. The 'essential users' don't want the hassle of owning their own cars.'
Sarah Messingham,fleet manager, J A Magson

'No. We may see a shift in vehicle types being taken up as drivers opt for lower CO2 ratings, but CO2 on its own is unlikely to get drivers opting out of company cars.'
Alan Miles, administration and data protection manager, RNIB

'No, not if manufacturers meet the challenge to produce ever cleaner engines, thus keeping the tax burden low.'
Chris Waymouth, group administration director, Transeuro Amertrans

'No. All our car drivers are user-choosers and all have found that they have been able to save money (if they want to) by carefully selecting their vehicle.'
Name and address supplied

'No, in our company the car policy favours the new tax regime as measures were taken early to make sure most of our drivers gained from the new tax. Most of our drivers will see a tax reduction of about 7%.'
Chris Ward, Channel Express

'No, I think there will be some more thought given to choice of vehicle, but the appeal will remain.
John Nixon, ALP

'No. People like me who enjoy perk cars, as long as they make the necessary transition to diesels, will pay significantly less tax and for essential car users it will remove the need to make questionable journeys to inflate annual mileages.'
Glyn Davies, finance director, Staedler

'Yes. Our own car fleet has reduced by 15% already with more expected to follow suit when cars are due for renewal.'
Nigel Crane, facilities manager, Dudley Jenkins Group

'No. It will encourage a switch to diesel or more economical cars which manufacturers will research.'
Mike Bacon, finance manager, BHR Group

'No. But indirectly it will have an impact on user-choosers. I expect a gradual move to lower taxed, more fuel- efficient vehicles. The company car is still perceived as a benefit worth being taxed on.'
Chris Hackett, Anglia

'Yes and no. A director who wants a 'fat cat' car which will have high emissions will not want to pay the tax and would have to downscale. Generally speaking it should not reduce the appeal. The spec on a lot of cars is pretty good these days.'
G.O.R Details supplied

'Yes and no. Yes if you are a high-mileage driver of a large high-emission vehicle faced with higher tax bills who perceives (rightly or wrongly) that downsizing is not a practical option. This type of driver may opt for a car allowance and buy second-hand the type of car that suffers high front end depreciation, but not overly high ongoing costs and take advantage of rather generous FPCS rates (even better if a higher rate tax payer).
No for those people like me who currently take a car allowance as the 25% or 35% mileage-based bands are prohibitive. The prospect of a quality diesel car on 18% P11D basis may move this type of person back to a company car as tax bills fall by 28–49%.
The new company car tax should encourage lower mileage drivers into newer, more efficient and cleaner vehicles. However this could be negated by many higher mileage drivers continuing in older, less efficient vehicles.
Ian Smith, group accountant, CPiO

'Yes, but not significantly. Although the changes are meant to be 'tax neutral' there will be some losers. There will be less choice as drivers/ manufacturers move towards lower emission cars. Lower emission cars (diesels, etc.) have less appeal to many drivers who may prefer cash.'
Ian Dow, finance director, Bellway

'No. Consensus in the office is that company car tax will reduce — reality in April (and subsequent Aprils) may prove different but the attraction still seems as strong as ever'.
RCL Details supplied

'If you want a one-word answer, then it would be 'no'. However, I think it may depend on what car the driver is currently driving and for how long they have been used to driving a gas guzzler, with high business mileage reducing their tax liability. Also how sensitive or caring the driver is in respect of environmental issues, which the new tax is aimed at.'
Pat Marks, Hilton

'While I believe company car drivers will consider whether the car is a benefit or not, I suspect if they choose their car with emissions in mind, the company car will survive for reasons of convenience and budget control — if they opt out then they start picking up all ancillary costs. Further, they may decide that while the tax is high they couldn't achieve the same value of car if they were to opt out.'
Phillippa T Caine, company secretary, CORGI

'Yes, to business users. However, perk car drivers who have not previously been able to claim any of the mileage reductions can generally be no worse off.'
Paul Owen, Rio Tinto 'Yes. We could also be losing good quality fleet engineers and managers who may never be replaced.'
Name and address supplied

'No - it may slightly increase the appeal of company cars.'
PM Details supplied

'It will reduce the appeal to the higher business mileage essential-user company car drivers, but will increase the appeal to the perk drivers, since in most cases their income tax liability will be reduced.
The Government has made a fundamental mistake, since it is penalising those drivers who cannot perform their duties adequately without driving a considerable number of business miles. The measurement of the benefit of a company car lies in the personal use of the car, so a fairer policy would be to base the income tax liability on the private mileage of the car. Since under current legislation companies are required to maintain accurate records of business miles driven, it is a simple process.'
Jeremy Spring, administration manager, Pechiney UK

  • Do you want to make your voice heard and have your say on key company issues? We already have 75 members on our new Fleet Panel and would welcome more participants. To join, email Fleet News' editor: jonathan.manning@emap.com.
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