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therefore, you’ve got a bit more control over your grey fleet. You know it’s a modern car, you know it’s an EV, you know it’s been serviced, you know it’s insured.” Centrica, which reportedly has around 20,000 UK employees, is a good candidate for salary sacrifice, but it does not always suit smaller organisations, as Lightbody explains. “I remember doing a scheme 20 years ago. I was one of the early adopters, and it was enormously complicated. “It had to be a fleet big enough for the savings to be cost effective for the administration. Since then, where I’ve been, it’s never been adopted, simply because the organisation was too nervous about the longevity of said tax schemes or concerned about drawing attention by HMRC or others. I think it comes down to the culture of the organisation and how brave they want to be. I also think it’s down to things as simple as staff attrition.”
It is also possible to exploit common, post-pandemic working patterns to either dramatically reduce grey fleet or get rid of it completely. It will depend on the organisation, but Golding points out that the general drop in physical business meetings means employees who are not eligible for
“A company car, I think, has always been pretty good value for money.”
a company car probably do not need to be travelling that much anyway. And, when they do, you could just tell them to get there via other means.
“The whole dynamic has changed,” says Golding, “there is a massive reduction in what one could now deem a necessary journey. And if that means that somebody perhaps would have used their own car, it could now be: ‘I’ll tell you what, use the train’.
“What we recommend for companies when they do have very occasional use – as in, they may use a vehicle once or twice a month and they are still grey fleet drivers – is that you are better off putting them into a pool car.”
For employees with the choice between a cash allowance and a bona fide company car, Lightbody reckons the way to sell it is by illustrating just how a much a personal car costs to own in comparison with a fixed-cost BIK arrangement – even one at the higher
end of the spectrum. “A company car, I think, has always been pretty good value for money… unless your car allowance is, like, a grand a month, and you’re a 20% taxpayer – and that wouldn’t happen – you then look at cash allowance and think, ‘I’ve got all this money available’, but actually, by the time you finance it, insure it and you put four tyres on it…
“I’ve had discussions with drivers, where they’ve said, ‘my car is going in for a service, an MOT, it needs four new tyres, and that’s going to cost £1,000 – can I move to a company car?’. They don’t realise how much cars cost to own and maintain and insure until that cycle comes around every year. Or, they had a bump and, all of a sudden, the [insurance] premium goes up, and it becomes unaffordable. Then they become acutely aware of it. That, say, £500-a-month comfort blanket of a company car – which is the worse-case scenario – actually doesn’t look like that bad a deal.”
www.businesscar.co.uk | May 2022 | 21
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