FOR those trying to find the best company car policy for their fleet, the choice would, at first glance, seem to be between the standard company car offer, cash-for-car, or an employee car ownership (ECO) scheme.
But while these are the most commonly debated ways of providing a car as a benefit to employees, they are not the only option. Some firms eschew these well-trodden paths and instead try something different. They want a scheme that remains attractive to current and prospective employees, but that also stays manageable.
One such organisation is professional services giant PricewaterhouseCoopers (PwC). In recent years it has run a ‘salary sacrifice’ scheme as part of its overall staff benefits package.
Many firms have benefits packages that offer a wealth of perks, paid for directly from salaries. These are often extra holiday time, gym membership or private healthcare cover. So why not a company car?
Head of car fleet services at PwC is Tony Leigh.
He explained how the firm’s benefits scheme – called Choices – and the company car package fit together.
‘The Choices scheme allows all staff to request a mix of pay and benefits to suit them,’ he said.
‘Benefits they may request include additional holiday, private medical cover, various risk insurances and a car. And not just one car. Providing staff have enough funds available, they may opt to have more than one car through the scheme.’
Unlike an ECO scheme, the cars are provided under a traditional contract hire arrangement and the car attracts benefit-in- kind taxation in the usual way through PAYE.
Where the scheme differs from a traditional car fleet is that the price of any of the benefits taken through Choices reduces the employee’s gross income and the employee then pays tax on the benefit value. This therefore reduces the gross income subject to income tax, meaning that choosing the right car can save a considerable amount in tax.
The car scheme was set up in collaboration with the Choices benefits team.
Leigh said it was not hard to put together, but simply involved working out monthly prices for all the cars available and putting them on an intranet.
He said: ‘To make it easy for staff to cost the car and weigh up options, a full online quote and ordering programme is provided.
‘This gives the total monthly and after-tax cost of all cars. It allows comparison of different models, including images of each car, addition of options and accessories and the ability to provide the cost over various periods of hire from 12 to 48 months.
‘Once the employee decides on the car, then a simple press of a button sends the car order through to the supplier.’
By trading other benefits, staff can order almost any car they like, within reason.
There are checks in place to ensure that they can afford the car they choose, but otherwise it is an open choice.
Popular cars among the lower ranks of staff include Vauxhall’s Astra and Corsa and the Renault Clio, while higher earners often choose BMWs, Audis and Saabs.
Future scheme enhancements planned include the ability to track order progress and compare the scheme car prices with those available from dealers and internet providers.
So how has it been received by PwC staff? Two years ago, the number of cars on the scheme stood at 2,400. Now numbers exceed 3,600 and growing.
‘All 15,000 staff are eligible and may choose any car available in the UK, provided it is right-hand drive and there is enough money in their overall package.
‘This has the advantage of removing the hierarchical element of a traditional car scheme. No matter what the status of the individual, they can choose the car for their individual lifestyle.’
Leigh admits there were concerns with such a range available about how to reallocate cars when staff leave the company. However, more than 99% of the fleet is utilised.
He said: ‘The best route of early termination or reallocation is calculated to ensure minimal cost to the firm. Reallocated cars are discounted against the original monthly Choices price, so incentivising staff to take one.’
Leigh said its main advantage was allowing all staff to participate in a car scheme programme, eliminating arguments over who can and can’t have a car. Then why not an ECO scheme? Leigh explained. ‘By having an attractive car scheme PwC can encourage staff to drive a firm’s car rather than their own for business journeys.
‘This contributes to lowering the risk associated with staff driving their own cars. PwC is also able to use its buying power to ensure that cars available through the scheme are available at attractive rates compared to either buying a car outright or leasing through an ECO scheme.’
How it works
- Staff log on to the Choices benefits intranet.
- Their car allowance can be adjusted by trading other benefits, such as holiday entitlement or medical cover.
- A list of cars is on the intranet, along with a monthly Choices price and the price after tax.
- Staff specify which car they want, along with accessories and the length of hire.
- After a few clicks, the order is made. In-built checks make sure staff members can afford the cars they want.
- The car is delivered and company car tax is paid by PAYE as normal.
- When the staff member leaves, the fleet management team decide whether to reallocate the car or terminate the hire period early.