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Why Company Cars are Still Important After Coronavirus

The company car is a benefit for many employees across the country but, with homeworking and virtual meetings now considered the norm thanks to coronavirus, has 2020 rendered the company car obsolete?

In 2019, before the world changed, business fleet vehicles accounted for 53% of new car sales. That was 1.23 million cars going to business users. Over 365,000 new vans were sold for fleets last year too. Many industries were affected by coronavirus – car manufacturers and company car hire businesses among them.

How lockdown affected company cars

When the first lockdown came into effect, company cars up and down the UK were simply gathering dust. As a taxable benefit, this caused some issues for employees who weren’t using their cars or had been furloughed. The tax costs were also accruing for employers.

If a company car is not needed for private use, there is an opportunity to save tax. HMRC applies this condition very strictly and requires that the vehicle is not available for private use:

“A car kept on an employee’s driveway during a period of furlough would still be considered to be made available. Neither would we accept a SORN declaration as proof of unavailability.

Ordinarily, we would expect that the car is handed back to the employer so that it cannot be used. However, we recognise that under the current circumstances it may not be possible to hand the car itself back, we would accept that where all the keys (or tabs) are in possession of the employer, and the employee does not have the authority to request the keys are returned to them, the car would be unavailable.”

Paul Hollick, co-chair of the Association of Fleet Professionals (AFP), the fleet industry’s membership organisation, said: “Logistically, that’s a bit of a disaster, because you’ve got keys going all over the place. What happens if you just wanted to move it, get it off the driveway for a bit? The whole thing […] was just impractical.”

 

Does more homeworking mean fewer company cars?

Even after the pandemic has subsided, the way we work will have changed forever. Employers have recognised that working from a shared office is no longer a necessity. Business travel will be less frequent, and more companies will opt for video conferences over travelling to meetings.

Hollick doesn’t think that this equals a decline in company cars though. While of course there will be changes, he believes the sector will see growth. There will be permanent structural change to how businesses function, but that “only concerns a relatively small part of the company car parc. All the other reasons that cars are operated by employers– from job need to human resources considerations – remain in place.”

Arguably, rental vehicles could be on the rise, with more people looking for safer ways than using public transport to travel. During the first lockdown in March 2020, B2C car hire saw over 1,500 key workers rent vehicles for over 19,000 days.

 

 

 

 

Car dealership.Young man receiving car key from saleswoman.
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