HR and Company Cars
It’s been a fluid company car landscape for HR professionals recently, with multiple changes that can impact car benefit provision to your employees, such as:
Company Car benefit-in-kind taxation
Upcoming changes with the introduction of 15 new bandings, of which 11 will be for ultra-low emitting cars.
From 2020, the appropriate percentages for zero emission cars will drop from 16% to 2%, while those for cars with CO2 emissions between 1g/km and 50g/km will vary between 2% and 14% depending on the number of zero-emission miles the vehicle can travel.
- Changes are designed to incentivise vehicles which can drive more regularly on battery power; particularly all electric cars
- If not in place, electric and plug-in electric cars should be considered for choice lists
- Review of all diesel cars on choice lists, to ensure the most CO2 efficient RDE2 engine models are included
The Move to Green Cars
Linked in with the company car benefit-in-kind changes, there is an increasing demand for electric and plug-in electric company cars from employees.
Whilst the headline figures appear to be positive, there are considerations when implementing these vehicles onto a choice list
- Is the vehicle fit for purpose? Can the employee continue to do their job – range of the vehicle, boot capacity etc.
- With either electric only, or a mix of petrol and electric ‘fuels’, how do we reimburse the employee for business mileage?
- Charging – what infrastructure do we need to support employees charging vehicles, and what capacity does the employee have to charge the vehicle at home?
Car CO2 Emissions
Following the Volkswagen emissions scandal, there has been a global review of how vehicle emissions are tested.
The new standard for car CO2 emissions (Worldwide Harmonised Light Vehicle Test Procedure – WLTP) is now impacting the company car market, with many vehicle models CO2 emissions increasing by 5%+
- What vehicles have fallen off choice lists
- What has been the impact on the employee’s car benefit-in-kind from these changes
With continued uncertainty over the exact terms of our departure from the EU, the impact on the company car choice is still unsure.
Any unstructured exit could increase trade tariffs from Europe – increasing the cost of cars imported from Europe. Whilst non-European car manufacturers could benefit from a reduction in tariffs.
- A scheduled review of car choice and policy as soon as the exit terms are known, to ensure any major cost changes are reviewed and the appropriate vehicle manufacturers are included on the choice lists
Vehicle Salary Sacrifice Schemes
Changes in tax legislation in April 2017, via the OPrA policy introduction, have resulted in the majority of tax benefits of using salary sacrifice for cars being removed expect for very low CO2 emitting cars (sub 75g/km).
- If you are wanting to provide an all employee car scheme option, consider an ultra-low emitting salary sacrifice scheme or;
- Utilise other structured schemes, such as a staff personal contract hire scheme
With so many recent and upcoming changes, we recommend regular reviews of car choice and relevant policies to ensure the benefit level is being maintained from your company car scheme.