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‘Troubling’ lack of fleet awareness of cash or car changes

Nearly half of UK fleets (46%) are unaware of changes to cash or car taxation introduced by the Government in April, with smaller fleets particularly in the dark.

Man with key

According to Arval’s CVO research, just under half of UK fleets are unaware of the cash or car changes despite the implications for employees.

From 6 April 2017, the new Optional Remuneration (OpRA) rules mean that employees given a choice of a company car or a cash allowance will now be taxed on the higher of the two, no matter which option they choose.

Although it was known that the changes would affect new salary sacrifice arrangements after this date, confirmation in this year’s Finance Bill that the changes would also impact cash or car schemes is said to be leading to a “seismic shift” for fleets, with both drivers and fleets hit by the financial implications, leading some fleet experts, including Professor Colin Tourick, to warn of the need to review such schemes.

Yet according to analysis by Arval’s Corporate Vehicle Observatory, only (54%) of the 3,847 fleets surveyed said they knew about the tax changes, with awareness very much dependent on fleet size. While 77% of larger fleets (more than 50 vehicles) said they were aware, this drops to 44% of medium fleets (10-49 vehicles) and 35% of smaller fleets (1-9 vehicles).

This is despite the fact that more than one in 10 (14%) of all fleets offer a cash allowance option to all drivers according to the research while a further 21% offer it to some.

Shaun Sadlier, head of Arval’s Corporate Vehicle Observatory in the UK, said: “Given that getting on for 40% of fleets that took part in the survey offer some kind of cash allowance option to at least some of their drivers, the lack of awareness across the sector is troubling.

“It could be that some employees find that their net pay is below the figure they anticipated in the months to come, without any warning given, as a result of the taxation changes and employers have a responsibility to signpost that this is happening.”

Sadlier also called for more action among the industry to advise SMEs on the changes.

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Natalie Middleton

Natalie has worked as a fleet journalist for 16 years, previously as assistant editor on the former Company Car magazine before joining Fleet World in 2006. Prior to this, she worked on a range of B2B titles, including Insurance Age and Insurance Day. As Business Editor, Natalie ensures the group websites and newsletters are updated with the latest news.