Goodbye company car?

Foreword - Alison Chapman, Head of automotive tax, Deloitte

The Government’s pay freeze of the 1970s and high personal tax rates created the company car culture within British business which has given rise to a multi-billion pound industry.

For almost 30 years the company car was, without doubt, the favourite benefit of employees. Today, while the company car continues to retain significant popularity - with both companies and their staff - the radical reform of benefit-in-kind tax in 2002 prompted a fundamental review of its value.

In recent years we have seen, and continue to see, employers reassess the cost of providing company cars to their staff. Meanwhile, the change in benefit-in-kind taxation coupled with a greater focus on work/life balances has led to employees, in many cases, looking for alternatives.

Flexibility in the provision of corporate transport solutions has become crucial to both companies and their employees, but both parties have frequently failed to analyse in detail the full implications of opting out or staying loyal to the company car.

That is because the issue is far from a straightforward ‘in’ or ‘out’ decision. But, in my experience, too many companies have tried to treat the choice as exactly that and have ultimately paid the price in terms of rocketing costs, administration overload and disgruntled employees.

In addition, it must be remembered, that in today’s business world the ultimate decision on whether to provide company cars, one of the myriad of alternatives available or, as frequently happens following detailed analysis, a mix of the two there are many other issues impacting on the solution.

Such considerations bring into play fiscal, legal and environmental regulations and measures introduced by both the UK Government and the European Commission as well as the impact of decisions made by organisations such as vehicle manufacturers and oil companies operating in a global economy.

This publication is intended to assist the company car decision-making process of the Boards of Directors in every company in Britain by outlining the issues and how they will impact on your organisation and its employees.

From the Government’s transport strategy to fuel pricing; congestion charging to caring for the environment; corporate at-work driving health and safety responsibilities to vehicle funding; and vehicle taxation to benefit-in-kind tax changes we have highlighted the issues that we believe impact on the future of the business car.

This report has been compiled with the help of many industry and political leaders and I would like to thank them for their assistance.