If
your staff ask about ‘Cash for Car’
Schemes, will you have an answer?
Today, the Company
Car plays a hugely important role in the
British Economy: around half of all new
cars each year are acquired by Company fleets
or Businesses.
Although many company
cars are inevitably ‘tools of the
trade’, they also play a crucial role
in corporate culture and remain important
staff motivators and retainers, help project
company image, establish employee status,
and provide mobility.
Company cars also
have a big financial impact on businesses
and their employees. After the payroll they
are usually one of the biggest employment
costs for a business, and staff are taxed
on their provision.
But changes to the
benefit-in-kind taxation system have forced
the re-evaluation of the company car.
Your employees may
be looking to you for advice. Do you know
what’s best for them? Should they
keep their company cars or will you offer
the option, like many companies, of taking
cash?
This booklet seeks
to identify the key issues companies need
to consider when offering cash options.
Why should
we be considering ‘Cash for Cars’
now?
General awareness
about company car tax issues has never been
greater. It’s being driven by environmentally
based changes to the benefit-in-kind company
car tax with the Government’s Approved
Mileage Allowance Payments (AMAP).
How might
they impact on employees’ tax positions?
The government is
committed to reducing carbon dioxide (CO2)
emissions in the UK and the car is considered
to be one of the main sources of this greenhouse
gas. The benefit-in-kind tax and AMAP's
form part of an initiative to lower CO2
levels by encouraging drivers to choose
smaller, more fuel-efficient cars and reduce
the amount of business
mileage they clock up.
It is thus vital
to consider if the company car remains the
correct choice for your company –
indeed, it may be worth looking into the
broader subject of vehicle choice and funding
methods.
