A new Employee Car Ownership (ECO) scheme has been launched by The Miles Consultancy (TMC), in partnership with BCF Wessex and Hitachi Capital Vehicle Solutions (HCVS).
Car IQ aims to protect employers and employees from rising costs associated with a traditional company car.
ECO arrangements came to prominence with the introduction of the emissions-based system of company car taxation as a way to mitigate increased benefit-in-kind (BIK) charges. An ECO car looks and feels like a company car with one significant difference – the employee owns the car. As ownership rests with the employee there can be no company car benefit no matter how much support or discount the employer facilitates.
The employee purchases the car under a credit sale agreement and meets the monthly finance and running costs using a mixture of income tax savings from no longer having a company car, maximum tax-free mileage reimbursement for business journeys and a top-up payment from the employer via the payroll.
Paul Hollick, MD of TMC, said: “Car IQ gives company car drivers and their employers the option to continue to benefit from a structured car scheme without the punishing increasing tax costs. The employer saves money whilst the employee is protected from an annual increase in the company car tax they pay. It’s truly win-win for everyone.”
The scheme was developed in response to the recent legislation on Optional Remuneration Arrangements (OpRAs) and the ever-increasing company car tax in the UK.
TMC arranges the funding with HCVS and the mileage capture, fuel management and audit while HRUX and BCF Wessex provide the tax advice, scheme advice, vehicle by vehicle, support, the HMRC approval process and the technical payroll adjustments.
BCF Wessex and HRUX will work out the break-even point for each car in terms of the annual business mileage that needs to be driven to ensure Car IQ makes cost savings.
The company claims that in some cases only one business mile needs to be driven for Car IQ to make savings.
ERA Fleet Cost Management will support the holistic programme by providing support with vendor stewardship and management.
Mike Belcher, head of sales for Hitachi Capital, added: “The continuing rise of company car taxation, coupled with the recent regime changes with WLTP and OpRA means that both employees and employers need a viable alternative. The pace of change also means that it is important that any solution that a company puts in place needs to be able to adapt as legislation and the market place evolve. We are very excited to be a part of this product launch having successfully run schemes of a similar vein for the past seven years.”