Fleet News

Fleet Panel: Firms reject BIK tax compensation

DRIVERS who complain about rises in their company car tax bills under the new benefit-in-kind tax system will receive short shrift from their employers.

Contributors to this week's Fleet Panel were almost unanimous that it was not the responsibility of an employer to compensate staff for Government-imposed tax changes.

Panel members insist they will not raise salaries if the Government increases income tax, and nor do they expect the 'winners' under the carbon dioxide-based company car tax system to reimburse their employers for tax savings. The vast majority of fleet decision-makers have calculated that their drivers will be better off under the new tax regime - some of them by hundreds of pounds a year - adding that as employers they advised their drivers early to select low emission cars.

Indeed, one of the two fleets that will reimburse drivers whose tax bills rise will restrict any supplement to employees who selected their company cars prior to March 2000 when the full details of the new rules were published.

Overall, the findings reinforce research conducted by Fleet News in association with Ford last November, when 10% of company car drivers said they would request a salary increase to compensate for benefit-in-kind tax rises, but only 1% of employers said they would offer such an increase.

##Yes 2--left## ##No 98--right##

' Will your organisation provide any financial compensation to company car drivers whose benefit-in-kind tax bills rise under the emissions-based company car tax system?'

'No. I have been proactive in advising my drivers of the implications of the new tax scheme for the last couple of years and drivers have taken heed of this advice and are choosing vehicles that are much more tax-efficient. In the past we never compensated members of our field force who did under the 18,000 business miles threshold because of the nature of their territory, and paid tax at 25% so it's not in our interests to change our attitude now.'
Di Rees, business services manager, Leo Pharmaceuticals

'No. Equally we will not ask those saving money to take a reduction in salary. We have been advising drivers for two years about the effects of the CO2 tax and therefore only about 30% of our drivers will have a car that is not of their choosing under the new rules. I do have some sympathy with regard to the fuel scale rates for those drivers whose fleets still offer fully funded fuel without any option to opt-out.'
Mick Donovan, group fleet manager, Bowmer & Kirkland

'Yes, but only drivers who have not replaced their cars since March 31, 2000. Others knew of the changes and had to consider the implications when choosing their new vehicle. Compensation will be paid only up to the date that they receive a new vehicle. The number of drivers involved will be no more than three.'
Richard Warner, company secretary, Seco Tools

'No, but we are considering offering a cash supplement option in lieu of a company car at no additional cost to the company.'
Barry Lingard, fleet manager, Leisure Link

'No. There have been some opposing views on whether and how drivers get compensated and it has been decided that no recompense will be paid. We have taken the stance that we cannot be held accountable for personal tax law changes. This stance was taken primarily because of the results of our analysis where in general, we have a fleet that is split roughly down the middle, with half benefiting from the new system and the other half losing out.
In most cases, the benefits and losses are small as most of our fleet is sub-£16,000. As a result our new policy followed the Government's guidelines and sought to encourage drivers to downsize where appropriate. This involved adding a CO2 cap to normal vehicle allowances. Most drivers have responded favourably.'
M.D. Details supplied

'No. Drivers have been made well aware of the situation over the last couple of years and have been offered various solutions to ease the effect of the tax burden. Special treatment among those disaffected could set a dangerous precedent. Companies cannot be expected to immunise employees against future tax legislation. However, I believe a moral duty does exist to educate and support staff by offering realistic alternatives.'
Mark Paget, technical director, Fleet Initiatives

'No. Companies do not normally compensate employees for external items such as taxation, so why should they this time? It is a dangerous precedent that we should take great care about in our decision making. It could prove to be very expensive.'
P.R. Details supplied

'No. We gave all our company car drivers ample notice of the forthcoming tax changes and they have all had the opportunity to change their cars or take a cash allowance. While we have been prepared to be flexible with assisting them to reduce their tax liability, we cannot accept responsibility for any financial hardship caused by Government legislation.'
J.S. Details supplied

'No. We were aware of the forthcoming tax changes and were very proactive in buying cars that were good on CO2 emissions. 90% of our drivers will be between 5% and 6% better off from April.'
Clem Bromley, fleet manager, GPN

'No. There are no plans to financially compensate staff who face an increase in their benefit-in-kind taxation.
Any argument from drivers affected is with the Chancellor of the Exchequer, not the company.
It is regrettable, but if the basic rate of income tax was to rise I don't suppose for a moment that staff would expect the company to compensate? I am, however, like others within fleet management, critical of the Government's timing as many of our vehicles are mid-term. Drivers of these vehicles have not had chance to consider downsizing, etc.'
Chris Fitzpatrick, area fleet co-ordinator, Telewest Broadband

'No. All (well, nearly all) of our drivers now have lower tax charges as a result of the changes (plus judicious selection of cars over the past couple of years, of course).'
G.R. Details supplied

'No. Out of 63 cars only four staff will be slightly worse off and they were advised of the consequences at the time of purchase. The majority of tax bills will drop, mostly from 25% to 18%. If this is replicated across fleets along with innovative private fuel strategies, it will be interesting to see what the Government comes up with to mend the big hole in tax revenues.'
Dave Gill, fleet manager, JM Computing

'No. Our company will not make any recompense to drivers who face higher tax bills as a result of the new regime.
However, we are hoping to move to a structured employee car ownership scheme which will leave the high mileage driver no worse off than currently.'
Leigh Weston, group transport manager, Sandvik

'No. This is not necessary due to forward planning that was made in preparation for the new system. However, companies who had not planned ahead may need to compensate drivers.'
G.K.G. Details supplied

'No. We have no plans to compensate drivers who are left short. However, I only have one driver out of 165 who fits this bill.'
Janina Diggins, fleet manager, Parexel International

'Absolutely not. Our handbook has always stated that employees will not be compensated for any increased liabilities as a result of Government policy. Employees have had the opportunity over the last two years or so to mitigate their tax liabilities but no direct compensation will be paid.
Ian Smith, group accountant, CpiO

'No. We have provided information about the new tax since 1999 to allow drivers to make an informed decision. Since then, the vast majority have changed their cars and our checks show more than three-quarters will either be tax-neutral or better off.'
Nigel Trotman, central services manager, Whitbread

'No. The overwhelming majority of our drivers chose their cars from a very liberal user-chooser scheme. We will help as many drivers as possible to try to re-use their vehicles elsewhere in the business.'
John Clarke, Fleet Services (South), Telewest

Leave a comment for your chance to win £20 of John Lewis vouchers.

Every issue of Fleet News the editor picks his favourite comment from the past two weeks – get involved for your chance to appear in print and win!

Login to comment


No comments have been made yet.

Compare costs of your company cars

Looking to acquire new vehicles? Check how much they'll cost to run with our Car Running Cost calculator.

What is your BIK car tax liability?

The Fleet News car tax calculator lets you work out tax costs for both employer and employee