Are fleet managers all at sea in waters of fleet uncertainty?

Are fleet managers all at sea in waters of fleet uncertainty?

Posted by

Martin Brown

May 2017

Fleet managers are swimming in very choppy waters at the moment; the trick is not to drown.

All around them, the waves of uncertainty are swelling larger with little sign of a red and white buoyancy aid to provide the support they are no doubt seeking.

Let’s take diesel. Currently still in the crosshairs of public opinion, the London Mayor is taking direct action with a T-tax for older diesels from October, charging such cars an additional £10 on top of the Congestion Charge to enter the heartland of the capital city. That much we know.

The T charge will affect mainly pre 2006 vehicles so it’s unlikely to be a concern for modern fleet diesels. Nevertheless, the toxic fumes of older diesels have wafted over all diesels as far as public opinion is concerned.

So the government, spurred into action, was due to present its draft air quality plans in late April, widely thought to include anti-diesel measures.

Good! Some direction.

But then dodged the bullet with the announcement of an election; which decision was challenged in the High Court. The government lost and has now said it will publish its plans post local elections (04 May) but before 09 May. So now at least there may be some concrete plans for fleet managers to work on.

That’s the diesel issue, then. But what about fleet managers helping employees plan their next company car over a four year cycle?

Well, despite the lack of ULEV incentive in the company car tax banding system from 2017-2019, at least the certainty arrives for 2020/21 when ULEV take up is encouraged, and pure EVs drop to a 2% tax banding.

Oh hang on…

No, sorry, that’s gone too in the General Election mash up. To rush through the Finance Bill, bits have dropped off – among those are the taxable benefits for ULEVs and, I notice, the first year capital allowances on workplace charging.

So we now only have vision for a three-year period – which is no help to fleet managers trying to advise drivers, and their corporations, on the best way forward over a longer-term cycle.

It’s enough to make you give up on the company car and just do cash for car…except that’s changed too. The new cash for car rules did manage to make the Finance Bill, and an employee will be charged benefit-in-kind on whichever is the greater – the cash amount or the benefit-in-kind for the car. It adds more complexity into the decision, and certainly more administration.

Part of the cash for car deal is that drivers can then charge employers for business mileage. Apart from the potential for fraud this possibly introduces – one leasing company described it as to “incentivise wrong behaviours like over-inflating business mileage and ‘double-dipping’ on travel expenses” – the allowances themselves are being assessed by HMRC.

The current review of expenses tax relief by the Office of Tax Simplification – which closes on 12 June 2017 – seeks to propose a radical shake up of travel and subsistence expenses so that they are only allowable if reimbursed by the employer. In other words, all tax relief on underpaid allowances would cease.

The result could put great strain on employers to pay the full amount of allowable expenses – 45p per mile for employees using their personal car on business for up to 10,000 miles.

It is yet another dilemma facing the fleet manager in the swell of fleet changes.

But I’m not a ‘doom and gloomist’.

Far from it.

While regulations are debated, put back, and delayed there is one clear channel through which fleet mangers can swim: and it’s the ULEV company car.

Company cars remain an essential benefit both in terms of work needs and its value for recruitment and retention. For that to remain the case, though, the company car needs to be an ultra low emission model.

Through all the apparent official chaos and noise, the direction of travel is very clear: it’s towards some form of electrification on your fleet.

Fleet managers can choose to be swept up in the tides of discussion over the chopping and changing of government policy. I would caution against that: focus, instead, on how electrification can be integrated within your fleet over the next three years.

Those that don’t will get left behind in the wash.

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