Cash Opt Out

Although much of our work has always been concerned directly with “company cars or vans”, our underlying expertise is actually in “optimising business travel by motor vehicle”. This has always been an important factor in our portfolio, but has become much more important over recent years. Businesses need and use vehicles in all sorts of ways for all sorts of objectives. It is very common to find that the number of employees who drive on business is actually higher than those with “company cars”. There are cost, cash-flow, several areas of tax, and the administrative resource all to consider. The UK fleet supply chain provides many options that mimic the traditional company car in terms of the services delivered, but which fall outside the “fleet” function. Together with the traditional method of a simple mileage allowance system, these are generally grouped as the “grey fleet”. According to HMRC data, there are some 4 million employees under this grouping – or just over twice the size of the conventional fleet population! There are 2 main issues to consider – and these are becoming increasingly important: ? Employers’ Duty of Care obligations, now absolutely identified as applicable to any journey “authorised” by the employer. Getting rid of the fleet and giving people a cash allowance can achieve many things – but does not absolve employers from this particular set of obligations ? Overall cost relationships – especially for employees seeking to opt out of a company car into private ownership. The entirely different system of taxable and tax-free payments means that employers can end up paying more than a fully-expensed company car, for the business use only! We have developed a number of complex computer models to evaluate all aspects of the “Cash or Car” equation, for employer and employees; and at pre-tax and after-tax levels. The models are all dynamic and include all relevant tax streams, as well as other benefit areas such as pension entitlements. We also have a full understanding of the policy implications of alternative arrangements We have established templates to assist in rewriting policy and other documents to ensure that cost, risk exposure and administration are handled robustly, and that Health and Safety/ Duty of Care perspectives are fully covered.