Car Allowances
Car Allowances as a financial tool
For some car allowances are used as a tool for delivering ‘company
cars’ in a more tax efficient manner, these are commonly known
as ECO or ‘Employee Car Ownership’ schemes. ECO schemes
make effective use of ‘Tax Free’ business mileage rates
to reduce the amount of taxable ‘Car Allowance’ necessary
to fund the business car, and can be an attractive proposition if
you have high mileage drivers.
Whereas the principles that govern these schemes are pretty much
consistent across a range of products on the market, the methods
of calculation and sometimes the components used vary dramatically
from provider to provider and as such the evaluation of schemes
can be exceedingly complex.
Couple the complexity with the necessary variations in compensation
and tax efficiency that will be inevitable with a driving population
driving different vehicles, with different mileage patterns and
with different tax codes, you may find that you have only the product
provider’s word and sometimes loaded calculations as the basis
for critical decisions.
Additionally, these schemes, regardless of the sales speak, are
quite demanding in terms of resource, and as such you will need
to take account of internal and outsourced structure when taking
decisions.
Fleetworx have experience with many different schemes, and can help
you evaluate these from a level playing field. We also know where
licence is taken on ‘projected savings’ and can highlight
the militating circumstances that need consideration.
We have the tools and experience that you need on your side of the
table to help create ECO solutions where both parties have their
eyes open and that can be effectively measured going forward.Section
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Car Allowances as Alternatives
Most businesses today offer car allowances in lieu of company cars,
to some extent within their business.
For many it is a method of delivering greater flexibility and choice,
and where restrictive company car policies are in place this can
present an attractive proposition. It is important, however for
all concerned to recognise the cost of cash allowances to the business
and the value to employees, if these are to managed and communicated
effectively.
Fleetworx have a clear understanding of the principle drivers of
cost and value in all car allowance situations and, aided by our
sophisticated software package, are able to help you create car
allowances that meet your key objectives, whether that be to contain
costs to the business whilst offering a realistic alternative, or
whether that is to encourage drivers in one direction or the other
through meeting their personal aspirations.
We have found that where accountants may be able to help with the
pure economics of calculating breakeven points, our specialist market
knowledge and experience with the commercial and operational aspects
of running car and cash policies, gives us a serious advantage when
helping our clients create equitable solutions.
Car Allowance review projects range from updating benchmark breakeven
points on a handful of grades, right through to a driver by driver
cost / benefit analysis across several hundred employees, the latter
being the exception rather than the rule, however essential where
drivers are being forced in one direction or another.
What you need to know
in order to get the balance right
Deliverables
of a Fleetworx Cash Allowance Review
Fleetworx Cash Allowance
Review Process
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