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Time To Look At The Big Picture On Company Car Schemes

Peter Eldon, managing director of car fleet solutions specialist Toomey Opticar, says businesses are at a serious disadvantage if they fail to look at the big picture when it comes to their car benefit costs.

Any business that operates a company car scheme has to accept that it can’t be done without some significant spending. Yet even now, when a troubled economic climate means that businesses need to be seriously considering every option to save on their overheads, too many companies are still failing to get to grips with the real net cost of running their car scheme or assessing the value for money it offers in comparison with other options for delivering the benefit.

Sadly, this approach means that their schemes are likely to be costing them more – hundreds of thousands of pounds in some cases – than they should, because money is leaking away in tax inefficiencies.

When there are so many variables to take into consideration – national insurance, maintenance chargebacks, termination costs and insurance to name but a few – a business that does not have the full picture on costs may see its only option as negotiating with suppliers for savings, almost certainly short-term, when trying to cut back on company car scheme overheads,

What businesses in this position really need to be doing is to look at the big picture, so that they can identify the internal inefficiencies of their existing fleet arrangements. The root cause of these is likely to be a lack of flexibility in the financing of the scheme, with drivers limited to one funding option, such as contract hire or cash allowance. The result is costly tax leaks because what might be tax-efficient for one driver will be considerably less so for someone else.

But by looking at the bigger picture, including alternative arrangements, the company and its drivers will be able to see how the costs compare for all the different options for a car benefit.

Toomey Opticar’s unique solution matches each company driver to the most tax-efficient form of funding, presenting very clearly how much each different funding option will cost them, based on their personal circumstances. It then maximises that tax efficiency throughout the contract via monthly mileage recording.

Our monthly online mileage logging module allocates and uses every available AMAP (approved mileage allowance payment) against every business mile recorded, with the information reported to payroll each month. There is no over or under-usage, which does away with year-end tax reconciliation needed, and so tax leaks are plugged.

For businesses that are serious about cutting costs, taking a look at the big picture can deliver big savings.

For more details, contact Toomey Opticar on 01582 518181