Cash remains in the driving seat for UK companies which have company-car policies

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The 2016 Company Car Benefits survey shows that 41% of British companies have a carbon dioxide (Co2) emissions limit on vehicles available through their company car scheme. In addition, over half of UK employees (51%) which offer company cars allow staff to choose an environmentally friendly vehicle, according to research by Willis Towers Watson.

The report revealed that 56% of companies are planning to review their current policy and environmentally friendly aspects are high on the agenda. It also found that nearly a third (30%) of organisations have started to encourage their employees to travel less and take advantage of web-conferencing, 7% have introduced trade-down policies to encourage use of more fuel-efficient cars and 16% are encouraging their employees to work from home.

Lisa Grunditz, senior consultant in Willis Towers Watson’s Data Service Team, said: “The growth in greener-car options has been driven by the increased tax burden that many countries have placed on vehicles with higher Co2 emissions. The introduction of tax policies based on carbon-emission levels has meant that lower-emitting, or environmentally-friendly, vehicles have become more affordable than higher-emitting alternatives.”

Additionally, the report found that 75% of UK companies offer company-car benefits and where such a benefit is offered 90% of managerial employees are eligible with almost half (45%) allowed to choose between a company car or a cash alternative.  Also, 25% of UK companies offer a car allowance only option, in contrast to much of Europe where the direct provision of a company car is still largely the norm.

Grunditz added: “In many European countries a cash allowance can be less attractive to an employee given the considerable tax benefit to a company-owned car as well as having none of the administrative burden and risk of owning a personal vehicle. It is also important to remember that receiving the keys to certain makes and models of vehicles can be as much about status as about the monetary value.

“Company car schemes and car allowances are increasingly used as a tool to reward staff in a more competitive way while introducing greater flexibility which employees are increasingly demanding in all areas of compensation. In the UK, the choice of whether to have a car or take an allowance is an important element of this.”