Company fleet vehicles

Changes will influence purchasing choices

Changes announced in Budget 2008 will mean that from April 2009 vehicles with emissions of 160g/km of CO2 or less will suffer no rental disallowance and could encourage more fleets to consider contract hire and leasing. The changes will make a big difference and effectively set two benchmarks for company fleet vehicles, one below 120g/km and one below 160g/km. Vehicles with emissions of 160g/km will, however, attract a flat 15 per cent disallowance, which gives fleet operators an extra incentive to select cars submitting less than 160g/km. This means that vehicles emitting more than 160g/km will become more expensive than cars up to 160g/km to buy or lease in tax terms.

The new 10 per cent benefit-in-kind tax band for company cars producing 120g/km of CO2 or less from the 2008/09 tax year is an important consideration. The Budget also revealed a reform of car vehicle excise duty rates and bandings, introducing new bands from 2009, which allow drivers of the cleanest cars to pay no tax in the first year.

Higher first year rates will apply in 2010-11 to influence purchasing choices. Capital allowances have also been reformed to base them on emissions. The greenest cars chosen for your staff will reduce the driver’s tax bill and the company’s Class 1A NICs.

Initially review whether your employees have access to the low emission cars that will enable them to reduce their tax bills in accordance with the new tax rules. Consider reviewing your fleet list by approaching manufacturers and explore with them possible models that could help. With safety in mind, review the latest safety ratings from the European New Car Assessment Programme to ensure you aren’t providing drivers with vehicles that won’t perform well in an accident. Try to get behind the wheel at events such as Company Car in Action so you can give your drivers a considered opinion.

The start of the 2008/09 tax year coincided with the launch of the new Corporate Manslaughter Act. Review your fleet safety policy and accident rate and benchmark these against other companies using services such as the one provided by interactive driving systems.

Consider requesting from your suppliers information about their risk management services and whether they will provide a free fleet review. Make it a priority to review how your fleet meets the standards set down in the Department for Transport/Health and Safety Executive Driving At Work Guide.

It is important to have accurate records and information that can help you manage drivers effectively. Ensure driving licence checks are up to date and consider how you will assess the risks facing your drivers on the road over the next year. Use your review to draw up a communication plan for the next 12 months targeting the areas where drivers face the highest risks, according to your own figures on accidents.
The introduction of a fleet ‘driving licence’ is something you could consider that is only issued if key checks on drivers have been carried out. Make it a priority to find out how many drivers are covering business mileage in private vehicles and ensure you have documentation for each employee and for their vehicles, including driving licence, insurance, MoT information and a record of servicing.
Carry out a review your fleet costs and determine how much you are paying. You could ask potential suppliers to submit data showing what they would charge to provide your fleet and make use of free running cost benchmarking services. Ensure that in working out the actual cost of your vehicles, you include tax costs in your equation for both the employee and the company, as these are a significant expense but are often ignored in cost comparisons.

One important area sometimes overlooked by drivers and employers are the tyres chosen and how they are looked after.20 per cent of a car’s fuel consumption is caused by tyres. Under-inflation increases braking distances and increases fuel consumption.

One possible solution is to introduce office car park tyre checks for all vehicles through major providers. Also, ensure you encourage regular tyre checks by drivers by explaining the safety and fuel economy benefits of taking good care of their rubber.

The introduction of a reminder on claim forms for business mileage, would remind drivers what they should be checking and at what intervals could. Also, ensure your procedures clearly show when a vehicle is next due a service and list the work carried out.

Consider sending out a survey to every driver and assess what congestion is costing them in time, and your business in lost productivity. Provide drivers with the tools and information to check traffic routes before they set off and encourage them to think about how they make their journey. If you have drivers entering the congestion charging zone, make sure you are registered for a fleet account to avoid unexpected penalty notices for non-payment of fines.

It is important to be clear about what technology is fitted to vehicles. Anti-skid control or electronic stability control (ESC) are essential devices that can prevent a vehicle from flying out of control during emergency manoeuvres. There is a European campaign calling for ESC’s to be standard in to all cars. By contrast, many companies are now reviewing their approach to hands-free phone kits in cars as there is clear evidence that drivers find talking on a hands-free phone just as distracting as talking on a hand-held one.

It is important that you plan ahead to ensure that your budgets can cope with the changes announced with fuel prices continuing to rise, initially by 2p a litre from this October with further steady inflationary duty rises promised from 2010, You also need to review how to use less fuel and also how you are paying staff to cover their costs. Many companies use pence per mile fuel rates to reimburse their staff, but it could pay to introduce fuel cards to enable effective management of actual business fuel costs. It could also be beneficial to invest in fuel economy training for staff. To help limit the impact of fuel use on the environment, investigate carbon offsetting.

Levels and bases of, and reliefs from, taxation are subject to change.