Fleet News

Fleet News Healthchecks: Fleets warned against knee-jerk reaction

Employers should beware of 'throwing the baby out with the bath water' when reviewing their fleet policies in the light of the new company car tax system.

Adrian Stevenson, a benefits specialist with KPMG and a member of the firm's CarWise consulting group, warned that organisations are in danger of becoming blind to the benefits of a company car amid unfounded fears that benefit in kind tax will rise prohibitively under the new emissions-based system.

'Employees underestimate how much they pay at the moment because tax has been creeping up over the past 10 years,' he said.

The potential difficulty with the new system is that its promise of revenue neutrality in reality means there will be winners and losers, particularly at the extreme margins where perk car drivers stand to be significantly better off and high mileage drivers worse off, all depending of course on the carbon dioxide emissions of their company cars.

'I can guarantee that the winners will not rush up to employers and say thank you, but the losers will be hammering down your doors to complain,' said Stevenson.

Some 10% of drivers will even seek a salary top-up to compensate them for their higher tax bills, particularly since the company car is an essential work tool to them, according to a major survey conducted by Ford last year, although only 1% of employers said they would offer any compensation.

Whatever the tax bills, however, the essential nature of the company car as a business and recruitment tool will not disappear, and Stevenson forecast that the fleet car will be here to stay in one guise or another for many years to come.

'Company cars may be provided in a different format, but the car remains very emotive to employees,' he said.

'There is still a shortage of skilled people, and one of the ways to recruit and retain them is offering a valuable rewards package of salary, pension and company car.'

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