New case-study research into company cars

COMPANY CARS

New case-study research into company cars

A recent report from Incomes Data Services examining company car provision in the UK suggests that future policy trends may have reached a crossroads.

On the one hand, some organisations are continuing to press ahead and replace existing provision with cash, while others have decided to move in the opposite direction and introduce more traditional looking car schemes. The result is a complex picture with a wider variety of policy designs than at any time in the past

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The IDS report, Company Car Policies 2007/08, says that the greater diversity in policy direction is being driven by a number of external developments that could have even more of an effect in the future.

One is forthcoming corporate manslaughter legislation which could leave employers open to criminal prosecution for any accidents their company car drivers may be involved in.

Another is proposed tax changes that could have an impact on the currently popular employee car ownership schemes (ECOS).

Flexibility under some pressure

Another notable trend picked up by the report was that some companies were reducing the amount of flexibility they include in their policies. In some cases this has meant the removal of cash allowances, while other companies have restricted opportunities to trade up and/or down. On the other hand, however, others are continuing to press ahead with the implementation of greater choice for their drivers.

Despite uncertainty over the final shape that policy takes over the next few years, IDS says that it still expects company cars will remain a key benefit for managers and professionals for some time to come.

Case-study based research

The IDS research includes seven chapters examining all the key areas of vehicle policy. The largest section provides a summary of the company car policies in 28 organisations of various sizes while other chapters draw on the findings to describe developments in areas including:

  • fleet acquisition and management
  • eligibility and acquisition
  • cash allowances and flexibility
  • additional costs: insurance and fuel
  • health and safety.

Case studies include finance organisations such as Barclays, Abbey and Lloyds TSB, oil companies Shell and Chevron and retailers, Next and Somerfield. In addition there are policies from less well-known, smaller organisations providing an indication of policies in companies of varying sizes.

A final word

IDS concludes: “While this year’s report illustrates a number of significant shifts in policy direction, our case studies suggest even further change may be expected. To begin with, the new health and safety legislation has not been fully digested yet, which could mean that more companies may start to consider their car or cash options. In addition, while the impact of the expected reform of tax-free mileage allowances on the financing of ECOPs is as yet unknown, there will be changes, and as a consequence employers with such schemes will need to address the question next year.”

Want to know more?

Title: Company Car Policies 2007/08, Incomes Data Services.

Availability: Visit www.incomesdata.co.uk to order a copy of the Company Cars 2007/08 for £275. Alternatively, call IDS customer services on tel: 0845 600 9355.

Incomes Data Services is an independent research organisation providing information and analysis on pay, conditions, pensions, employment law and personnel policy and practice. To find out more visit www.incomesdata.co.uk.