Today, the Company Car plays a hugely important role in the British Economy: approximately 55% of all new cars each year are acquired by Company fleets or Businesses.

Although many company cars are inevitably ‘tools of the trade’, they also play a crucial role in corporate culture and remain important staff motivators and retainers, help project company image, establish employee status, and provide mobility.

Company cars also have a big financial impact on businesses and their employees. After the payroll they are usually one of the biggest employment costs for a business, and staff are taxed on their provision.

But changes to the benefit-in-kind taxation system have forced the re-evaluation of the company car.

Your employees may be looking to you for advice. Do you know what’s best for them? Should they keep their company cars or will you offer the option, like many companies, of taking cash?

This booklet seeks to identify the key issues companies need to consider when offering cash options.

Why should we be considering ‘Cash for Cars’ now?

General awareness about company car tax issues has never been greater. It’s being driven by environmentally based changes to the benefit-in-kind company car tax with the Inland Revenue Approved Mileage Allowance Payments (AMAP).

How they might impact on employees’ tax positions?

The government is committed to reducing carbon dioxide CO2 emissions in the UK and the car is considered to be one of the main sources of this greenhouse gas. The benefit-in-kind tax and AMAP's form part of an initiative to lower CO2 levels by encouraging drivers to choose smaller, more fuel-efficient cars and reduce the amount of business mileage they clock up.

It is thus vital to consider if the company car remains the correct choice for your company – indeed, it may be worth looking into the broader subject of vehicle choice and funding methods.