Fleet News

Cash options are a safe bet, fleets told

FLEETS have been assured that launching cash-for-car schemes will not prove a gamble amid fears that a major review of mileage allowances could risk their future.

The battle for the hearts and minds of fleet operators is part of the fall-out from a shock Inland Revenue announcement that 250,000 drivers have 'disappeared' from the company car parc in the past few years (Fleet NewsNet, May 6).

As a result, civil servants said they would collect evidence of the causes of the mass opt-out, including the effect of approved mileage allowance payments, or AMAPs, a cornerstone of many opt-out schemes.

AMAPS allow employers to pay staff using private cars on business for their mileage without incurring tax or National Insurance contribution charges. Currently the rate is 40 pence per mile for the first 10,000 miles and 25ppm for any higher mileage.

But speculation of a review that might see the rate reduced has provoked an industry row, with many companies warning any such move could throw employee car ownership and other personal leasing schemes into turmoil.

Black-i Vehicle Management managing director Nick Brown said a cut would enable the industry to 'protect the company car'.

But Fleet News has been contacted by a number of companies concerned at news of the review. Industry figure Stewart Whyte claimed the review would almost certainly see the rates cut.

Alastair Kendrick, director PAYE/NI Solutions at Ernst & Young, said: 'The suggestion that AMAP may be reduced does not appear to be suggested in the IR report. It simply says it will be watched going forward.

'The danger is if this is reduced it will only encourage people in to smaller or older cars - it is unlikely to push people 'en masse' back in to a company car.

'This could lead to more risk over vehicles being used which are not fit for purpose. The figures also ignore the tax gathered on the cash paid to drivers who opt out either to take cash or an ECO vehicle. Furthermore, the largest group of workers possibly benefiting from AMAPs are Government workers.'

Nick Sutton, managing director of Provecta Car Plan, which provides alternatives to the traditional company car, said reducing mileage allowance payments would be a mistake.

He added: 'The AMAP system is the most popular way for millions of employees to claim back their business motoring expenses, and since April 2002 it is now the only way. It is used by the millions of private motorists who use their own vehicles for business purposes, including Government employees such as health workers.'

Gordon Calder-Jones, head of Alto and major corporate sales at contract hire and leasing giant Interleasing said: 'Company car operators should embrace alternative company car schemes rather than reject them because of this speculation.

'Businesses should consider all methods of providing 'a company car' and should ensure that the cost of providing vehicles is minimised regardless of method.'

Critics also suggest that the Inland Revenue has got its initial estimates of the company car parc wrong, particularly when compared to sales figures and business registrations from the leasing industry.

Other companies, such as GE Capital Fleet Services, also point out that structured personal leasing schemes account for 100,000 drivers at most, less than half the 'disappeared' drivers if the figure is correct.

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