Popularity of company car dented

COMPANY CARS

Popularity of company car dented

Tax reform has not killed off the company car, but for the first time in over a decade its popularity seems to have been "dented". That is the main conclusion to emerge from new research by pay analysts Incomes Data Services.

The IDS researchers found that cash alternatives are now widely available, not only to status car drivers but also increasingly to essential users. Like many reward practices, the move towards cash allowances has been largely a response to tax reform.

But for IDS the most important development over the past two years has been a marked increase in the pace of company car buy-outs accompanied by arrangements allowing employees to purchase their own vehicles. "At present, however, such buy-outs are still far from dominant and past experience suggests that it is difficult to dislodge the company car from its pre-eminent status as a benefit of choice," says IDS.

Key research findings

• Employees generally become eligible for status cars at around £35,000.
• Typically, employees need to drive 10,000 business miles each year to qualify for a job need car.
• At the median (mid-point) the lowest cash allowances were worth £4,200, while the highest was £8,420.
• Most fleets are managed externally.
• More employees are adopting Inland Revenue guideline rules for fuel and mileage reimbursements.

What you will find in this report by Incomes Data Services

This 100-page report provides a practical perspective on the complex, sensitive issues surrounding company cars. It offers an overview of the issues and brings together details of the company car policies in more than 20 major employers. The research includes chapters on issues such as:

Fleet acquisition and management A summary of the main methods of fleet acquisition, the rise of contract hire and moves towards personal contract plans.

Eligibility and allocation policies Details of how cars are allocated. Includes issues such as contributions towards private use.

Cash allowances and flexibility Approaches to cash alternatives and policies enabling individuals to trade up or down.

Additional costs Issues surrounding insurance and fuel allowances.

Reactions to tax changes Policy responses to the changes to company car taxation.

Case studies IDS collected information on car provision in 24 organisations, ranging from Royal Mail in the public sector to PwC in business services. Spread across more than 60 pages, the case studies cover the spectrum of practice. These include organisations that have bought out all company cars as well as those with a range of policies on individual choice and flexible options.

Want to know more?

Title: Company Car Policies 2003/04, Incomes Data Services.

Availability: To order your copy contact customer services at Incomes Data Services in London, tel: 020 7324 2599. To read the full contents list visit www.incomesdata.co.uk/mpr/cars.htm

IDS is a leading UK information and research service on employment issues, providing a range of publications for employers, unions, government departments and other agencies. To find out more visit www.incomesdata.co.uk

Posted 1 October 2003