Fleet News

Experts analyse the great company car 'black hole'

EXPERTS have dismissed claims in a major Inland Revenue survey that 250,000 vehicles have 'disappeared' from the company car parc.

Fleet NewsNet revealed last week that an Inland Revenue survey which discovered the findings had prompted the Government agency to launch a major policy review into why the number is falling.

The Revenue said the number of tax-paying company car drivers had fallen from 1.6 million to 1.35 million in the two years to November 2003.

It claimed major changes made to company car tax are a factor, as is the increased popularity of cash alternatives and employee car ownership schemes. The report said it had identified a number of reasons why there are fewer company cars.

These are:

  • Significant increases in the number of employers who are offering cash alternatives to company cars.
  • Increases in the popularity of personal car leasing and employee car ownership schemes.
  • Employees who have to pay more company car tax due to the reform opting out of company car schemes.
  • Fewer employees opting in to company car schemes than anticipated.
  • Some employees switching from vehicles subject to company car tax to vehicles taxed under existing company van rules.

    The report added: 'It is worth noting that not all of the decrease in numbers of company cars in the last two years can be explained by the impacts of the company car tax reforms.

    'The number of employers who were offering cash alternatives to company cars and levels of people taking part in personal car leasing and employee car ownership schemes was increasing before the company car tax reforms were announced and introduced. It is likely therefore that there would have been some reduction in the total numbers of company cars in the UK in the last two years anyway even if the company car tax reforms had not taken place.'

    However, more than half of all companies which offer cash alternatives and were surveyed by the Inland Revenue said uptake has increased due to changes to the company car tax.

    But fleet experts are questioning the figures, claiming they do not represent what is happening in the marketplace.

    John Lewis, director general of the British Vehicle Rental and Leasing Association, said: 'We do not believe this number, or anything like it, has disappeared. The Inland Revenue numbers can only confirm that number are out of the benefit-in-kind regime and could not be expected to evaluate the total company car parc. If we analyse the vehicles operated by our members they have only continued to rise over the past few years to a current total of 1,896,114.

    'If we also take the Inland Revenue number of 1.35 million and work on a three-year life cycle that would make company car annual registrations circa 450,000 per annum – way out from both the Society of Motor Manufacturers and Traders and International Car Distribution Programme figures.'

    Lewis said the BVRLA believed that an element of the cars were on structured personal lease programmes. He added: 'But this would be somewhere around 50,000, which means while they are outside the BIK regime but they will still be managed as company cars and therefore should be operated to good health and safety standards.

    'We have also been able to establish through our research that the number of schemes and volume of take up is not expected to rise significantly in the next three to five years mainly due to the opportunities available through the CO2 tax regime.

    'There will be an element where the employer has given staff cash and left them to their own devices but the number is difficult to establish but is not growing and will probably diminish.'

    The BVRLA's own research suggests that pool cars, which are outside of the BIK regime, could number 568,000 units.

    Lewis said: 'One area which the Inland Revenue numbers don't recognise is the increased income they will receive from the income tax levied on the cash allowances made to opt out drivers or those that have switched into ECOS/ECOP schemes.'

    Stewart Whyte, director of the Association of Car Fleet Operators (ACFO), also questioned the figures.

    He said: 'I could understand if it was a figure of about 100,000, which would be about right for employee car ownership schemes, but I'm at a loss to explain the other 150,000. One reason could be that smaller fleets have simply stopped recording information because it is too complicated.'

    An SMMT spokesman said: 'Our concern is that many are not going for the new car market but are buying old cars with higher emissions.'

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