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Low tax on EVs and financial security main benefits of company cars
The low rate of BIK tax for electric cars, financial security and convenience are among the top reasons why employees prefer company cars to funding their own vehicle, according to a new survey.
Research by Arval’s Mobility Observatory indicated that 31% of fleets without alternative mobility policies in place believe that for employees not having to finance their own vehicle was a key attraction.
However, the single most important standout response was that four times as many fleet decision-makers this year mentioned the very low personal taxation that applied to an electric car as a factor in opting for a company car.
This response was strongest in companies with more than 1,000 employees where 17% of respondents gave this reply.
Another factor was the ease of motoring with all services provided by the company (18%) and no risk of ownership such as residual values (16%). Delivery of a new car every three or four years (3%) was also listed.
Financial security and convenience key factors
Arval also noted that the vast majority of the factors mentioned by respondents were based around financial security and convenience – and highlighted that this avoidance of potential risk becomes potentially more attractive during times of economic uncertainty of the kind we are seeing now.
Arval said: “This bears out predictions widely made in the fleet sector in recent years that drivers who have taken cash options in the past will return to company cars and other employees will enter salary sacrifice initiatives as a result of the current minimal Benefit-in-Kind taxation rates and higher initial purchase price for EVs. This is something we expect to grow in the coming years.”
Arval Mobility Observatory’s Barometer also explored which solutions businesses offer to employees to finance a personal car. Respondents mentioned salary sacrifice (23%), cash allowance (23%) and personal contract hire (5%). While this repeats the results of previous years, salary sacrifice is again expected to show growth in future reports due to the current low BIK rates.
The survey asked organisations with as few as 10 employees up to those with over 1,000 employees the following question:
“What is the main reason you believe drivers stay with a company car rather than adopting a mobility solution?”
Businesses were also asked which solutions they offered to employees to finance a personal car. Some 23% said salary sacrifice, while the same number also said cash allowance, and personal contract hire lagged a long way behind at 5%.
Nigel McMinn, Chief Operating Officer, at Fleet Alliance said he was not surprised by the results.
“These results are very much in accord with our own experience. We are seeing huge interest in leasing EVs at the moment because of the attractiveness of the BIK rates, allied to the very high prices for petrol and diesel at the country’s forecourts due to the global energy crisis caused by the war in Ukraine.
“And leasing rentals for EVs are attractive as they become more mainstream and more models become available. All our EVs are sourced through our panel of carefully selected major funders, which means we benefit from the access to stock and levels of discounts available to large bank-owned leasing companies with huge buying power,” he said.
“We are also seeing strong interest from companies in our salary sacrifice scheme which promotes EV, primarily to SMEs but also to companies of all sizes.”
Salary sacrifice ideal way to drive EV uptake
Fleet Alliance views its salary sacrifice scheme as an ideal way to provide employees who would not normally qualify for a company car – or those who have opted out in favour of a cash allowance – with ready, cost-effective access to fully maintained, zero-emission vehicles at no extra cost to the business.
Significant cost savings are delivered for salary sacrifice customers through Fleet Alliance’s multi-bid funding solution, which employs competitive tendering amongst a panel of funders to ensure the maximum value is delivered to employer and employee by selecting the lowest cost – a facility not normally available to smaller businesses.
The scheme also offers employers complete freedom to tailor the lifestyle protection typically associated with salary sacrifice to their own circumstances, which reduces costs yet further enabling them to deliver greater savings to their employees
And Fleet Alliance is also providing access to e-Fleet, its acclaimed fleet management system, free of charge to salary sacrifice customers to help them manage their fleet administration.
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