Is now a good time to scrap cash?
21 May 2010
Key fleet issues, such as the risks associated with grey fleet drivers and the need to reduce the corporate carbon footprint, are causing many companies to rethink their policy of providing cash allowances rather than company cars. For these two main reasons, now could be the ideal time to consider scrapping cash in favour of cars, says Fleet Alliance.
The introduction of cash allowances in the UK to allow employees to buy their own cars, because of a perceived wisdom at the time that this was the most cost effective option, has led to a significant growth in what has been dubbed ‘the grey fleet’ – those cars owned by employees but used on company business.
The latest figures put the number of grey fleet vehicles at up to 4m, but this can present companies with problems with duty of care and the effective management of the vehicles in question.
Employers still owe the same duty of care to staff driving their own vehicles for work as they do to employees driving company vehicles. This means that need robust policies and procedures need to be in place to ensure that the grey fleet car being used is fit for purpose, has a valid MoT, is insured for business use and that the employee has a valid driving licence. Doing so can be administratively time consuming and hard to police.
Fleet Alliance provides a driver licence checking service that can help fleet managers tackle the issues posed by their grey fleet drivers, as well as verifying the driving status of their company vehicle drivers.
The online Driver Check solution addresses this issue through a convenient and comprehensive online portal which not only reduces administrative overhead, but provides a complete and thorough coverage of all duty of care requirements.
All the driver information is managed online in a secure internet-delivered environment, and Driver Check users can vary the licence checking frequency depending on the risk profile of the driver.
Another corporate pressure at this time, often from within, is to reduce the corporate carbon footprint and be seen to supporting environmental initiatives. There may also be sound financial reasons for doing so, not just environmental considerations.
Most if not all of the tax regimes associated with operating company cars – capital allowances, benefit in kind taxation and National Insurance – are linked to the carbon emissions of the vehicle fleet.
By going green and operating cars with as low carbon emissions as possible now makes sound financial, as well as environmental, sense.
Most motor manufacturers have already recognised this fact, and there are a growing number of mainstream makes with low carbon emitting models, including some of the higher end makes, such as BMW or Audi.
Martin Brown, managing director of Fleet Alliance, said: “Two main reasons suggest that now is an excellent time to consider a switch to back to company cars and away from cash allowances.
“From a grey fleet point of view, there is considerable corporate risk associated with allowing employees to run their own cars on company business, and the duty of care is by no means diluted simply because the company is not the legal owner of the vehicle.
“From a green perspective, there are very real financial and environmental benefits for all companies and their drivers in planning their fleet policy over the next three or four years to maximise its carbon efficiency.
“It is not merely a question of moving as many vehicles as possible below the 160g/km limit and hoping for the best, and you should always seek independent, impartial advice from your fleet management company in helping devise the most tax and cost efficient fleet policy.”
There were a number of options a company could consider to simply providing cash allowances, argued Martin Brown, that were more tax efficient and provided greater control over issues such as duty of care.
“A current day solution may be to re-introduce company cars for job need or essential user drivers, and then to bring in a salary sacrifice scheme for those employees who may not qualify for a company car but who may use their own vehicle on company business and want to have a new car which they fund directly from their salary.
“This is an area we are currently looking at in great detail and we are hoping to make an announcement on a new initiative shortly. Watch this space!”
21 May 2010
Key fleet issues, such as the risks associated with grey fleet drivers and the need to reduce the corporate carbon footprint, are causing many companies to rethink their policy of providing cash allowances rather than company cars. For these two main reasons, now could be the ideal time to consider scrapping cash in favour of cars, says Fleet Alliance.
The introduction of cash allowances in the UK to allow employees to buy their own cars, because of a perceived wisdom at the time that this was the most cost effective option, has led to a significant growth in what has been dubbed ‘the grey fleet’ – those cars owned by employees but used on company business.
The latest figures put the number of grey fleet vehicles at up to 4m, but this can present companies with problems with duty of care and the effective management of the vehicles in question.
Employers still owe the same duty of care to staff driving their own vehicles for work as they do to employees driving company vehicles. This means that need robust policies and procedures need to be in place to ensure that the grey fleet car being used is fit for purpose, has a valid MoT, is insured for business use and that the employee has a valid driving licence. Doing so can be administratively time consuming and hard to police.
Fleet Alliance provides a driver licence checking service that can help fleet managers tackle the issues posed by their grey fleet drivers, as well as verifying the driving status of their company vehicle drivers.
The online Driver Check solution addresses this issue through a convenient and comprehensive online portal which not only reduces administrative overhead, but provides a complete and thorough coverage of all duty of care requirements.
All the driver information is managed online in a secure internet-delivered environment, and Driver Check users can vary the licence checking frequency depending on the risk profile of the driver.
Another corporate pressure at this time, often from within, is to reduce the corporate carbon footprint and be seen to supporting environmental initiatives. There may also be sound financial reasons for doing so, not just environmental considerations.
Most if not all of the tax regimes associated with operating company cars – capital allowances, benefit in kind taxation and National Insurance – are linked to the carbon emissions of the vehicle fleet.
By going green and operating cars with as low carbon emissions as possible now makes sound financial, as well as environmental, sense.
Most motor manufacturers have already recognised this fact, and there are a growing number of mainstream makes with low carbon emitting models, including some of the higher end makes, such as BMW or Audi.
Martin Brown, managing director of Fleet Alliance, said: “Two main reasons suggest that now is an excellent time to consider a switch to back to company cars and away from cash allowances.
“From a grey fleet point of view, there is considerable corporate risk associated with allowing employees to run their own cars on company business, and the duty of care is by no means diluted simply because the company is not the legal owner of the vehicle.
“From a green perspective, there are very real financial and environmental benefits for all companies and their drivers in planning their fleet policy over the next three or four years to maximise its carbon efficiency.
“It is not merely a question of moving as many vehicles as possible below the 160g/km limit and hoping for the best, and you should always seek independent, impartial advice from your fleet management company in helping devise the most tax and cost efficient fleet policy.”
There were a number of options a company could consider to simply providing cash allowances, argued Martin Brown, that were more tax efficient and provided greater control over issues such as duty of care.
“A current day solution may be to re-introduce company cars for job need or essential user drivers, and then to bring in a salary sacrifice scheme for those employees who may not qualify for a company car but who may use their own vehicle on company business and want to have a new car which they fund directly from their salary.
“This is an area we are currently looking at in great detail and we are hoping to make an announcement on a new initiative shortly. Watch this space!”
Phone: 0845 601 8407 | Email: info@fleetalliance.co.uk | Legal information |
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