Introduction
If your staff ask
about ‘Cash for Car’ Schemes, will
you have an answer?
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.
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