There is a battle going on at the moment in many organisations across the UK, it’s a battle between employee and employer and the ammunition both are using is being happily supplied by the government and HMRC. Welcome to the company car warzone, where both sides can be completely unappreciative of the perspective of the other and the rules of engagement change with every budget.
Since the 70’s company cars have been a stalwart of employers benefits package and since the introduction of company car tax they have become increasingly political and emotive in equal measure. Let’s draw up the battle lines, the adversaries have something in common, both want and indeed need a car to conduct day to day business. The employee needs to get from a to b to allow the employer to succeed and in this joint aim at least there is unison but the way to get there is fraught with friction.
On one side you have the employer, the employer sees company cars as an ever-increasing expense, not just financial but sheer time. For many the company fleet can be second only to payroll and when a car is provided at the employers cost to the employee it could be argued should really express a little more gratitude.
Across the battle area, you have the employee, it’s not that the employee wouldn’t like to have a ‘free’ car, it’s that there really is no such thing as a free lunch and the employee knows that a company car while being pretty low admin can come with a significant tax bill. Their employer may not be charging them for the car but HMRC certainly are and the amount is no longer incidental. Yes it’s nowhere near the cost of providing the same car yourself but if you have little or no choice in the car you can have, then the driver can argue that they feel it unfair paying (HMRC) through the nose for a car they don’t want and resent it. Ultimately leading to neglect of the car like a toddler with a toy they don’t really want. This ‘collateral damage’ like all war casualties has costs and these costs are in turn incurred by the employer when the car is gleefully returned after 3-4 years to more moans when a newer version of the same is provided with a yet higher tax bill. Of course, many HR managers would love a company car and have to fork out the full cost themselves for a personal car, they think employees should just be grateful. The battle lines are set and both sides are dug in hard.
So, how can you keep the peace and stop the costs and politics of this conflict spiralling out of control?
Well, both sides have things in common, both want the company to succeed and both are happy to incur some cost to achieve this, however, neither want the politics nor to have something imposed upon them. The problem is companies priorities are varied as are employees demands. Some companies need 4 door, some estates, some employees have a passion to feel themselves thrown back in their seat at the push of their right foot, others need 7 seats to position themselves as far away from the thrown toys their ‘pride and joy’ hurl at their heads to a joyful ditty, Some really don’t care at all and want the simplest option but perhaps to bolster their salary.
We work with a number of companies facing this exact predicament. We keep the peace in a simple way. The employer can set a policy including monthly car spend, doors, brands, but keeping it realistic and flexible. The employee can then take this as a cash allowance, giving that up for the car truly of their, their partners or their kids’ dreams. If you need a driver guard to shield mom or dad from a flying buzz lightyear is can be included as can towbars, dog guards, pretty much anything. And if Buzz misses it’s target and smashes through the windscreen it’s not the employer’s problem. The employee can trade up to a Tesla and save tax and NI on the difference or trade down for a Toyota Aygo subject to employer rules and pocket the extra cash. Happy employees, after all, stay loyal and more productive and you know what, HR are happy too!
We wouldn’t like to do a Donald Trump and claim we deserve a Nobel peace prize but we do think we have a great way of fixing an employer’s costs, reducing their admin and making drivers happy, bringing perhaps not tranquillity but certainly more happiness to your workplace. Better still we can even extend the scheme to those not eligible for company cars although they meet the cost themselves.
Call in the peacekeepers today, and let’s bring harmony to your workplace!
Tags : benefits, benefits of salary sacrifice, car lease salary sacrifice, company car, company car schemes, employee wellbeing, hr