The possibility of the company car being labelled ‘outmoded’ and only being provided to essential users was put forward by one fleet decision maker at the March 2017 Fleet200 breakfast meeting.
With all the changes announced by the Government and Treasury updates affecting VED, BIK, cash/car and lease rental restrictions, the session also looked at the implications for choice lists and whether fleets intended to make any amendments to policy.
Points raised by participants to the debate included:
- Regarding the changes to taxation on cash options, the implications for drivers aren’t too bad in most cases if they now pay tax on the cash option rather than on the car benefit. However, if a company has harbouring a cash preference, the new rules give them the excuse to do it, and get rid of their company cars.
- One fleet said it has been challenged on the need to provide cars because they were seen as “outmoded”; it might result in a policy where only essential users are provided with a company vehicle.
- However, for employees that are only ever going to choose a car, the cash option should be removed so they do not get hit with the higher tax bill.
- Cars should still be seen as a key tool to recruit and retain employees, especially if they have a poor credit rating.
- The changes will result in greater systems complexity and confusion and there is concern that leasing company systems are not ready yet because the changes were only confirmed in the March Finance Bill.
- One fleet was suspending its cash offer while it evaluated the situation.
- There will be a massive impact if an employee doesn’t report the tax change if they are affected – and it affects the lowest grades the most. Putting in place a new policy (on cash) and not having to report on it until the end of the tax year in 2018 was described as “madness”.
- There is a view among some employees that they will opt for a higher CO2 emissions car because they prefer the more powerful engine and they are no longer incentivised by BIK to go for the efficient option.
- The VED changes are about educating the employee to choose widely. Many fleets rely on their leasing company to advise staff from within their systems. A car could easily drop out of an allowance zone because of the VED.
- Fleets need modelling tools at point of order because it will affect the rental for the employee.
- It was also pointed out that VED affects staff who take cash to buy a car.
- Fleets tended to based their fixed-choice lists on price and their open choice lists on the cash allowance.