Why Now Is The Right Time To Review Your Fleet Policy
With the huge changes in the fleet landscape over recent months, fleet decision-makers have been under significant pressure to make critical decisions for their businesses and keep their drivers informed and reassured about the potential impacts on them.
At times like this, it can be hard to take a step back to assess the wider implications of change but, paradoxically, now is exactly the time to ensure that the guiding principles on which the fleet is run are up to date and fit for purpose.
In this blog we look at some of the most pressing issues for fleet decision-makers and how these should be reflected in fleet policy.
There’s been a lot written about WLTP and the issues it has created in terms of vehicle availability. Less has been reported on the impact the new testing regime is having on fleet policies.
With many organisations now having vehicle grade bands based on CO2 emissions, WLTP’s more accurate measurements are pushing some vehicles into higher grade bands or even beyond the upper limits set out in policies. This is despite the CO2MPAS conversion currently being used to bring WLTP ratings more into line with the old NEDC measurements.
It’s clear that any fleet with CO2 policy rules should be reassessing these to ensure that they remain fair and relevant from an employee benefit perspective, while still meeting the organisation’s emissions objectives.
To watch our short animation on the impacts of WLTP, click here.
BiK tax movements
The obvious point here is that the trajectory of CO2-based Benefit-in-Kind tax for nearly all vehicles is upward. A driver in a car emitting the average, 121g/km, currently incurs a BiK rate of 25%, this will rise to 28% and 29% in the 19/20 and 20/21 tax years respectively.
However, for some vehicles the picture isn’t quite so simple. For drivers selecting ULEVs (Ultra Low Emission Vehicles with CO2 ratings of 100g/km or less), tax rates follow a different and less painful path.
For example, a driver currently in a vehicle emitting between 60 and 64g/km CO2 is paying 16% BiK, this will rise to 19% in the 19/20 tax year but then fall back to 17% in 20/21.
The most dramatic tax curve is for vehicles that are able to travel for a certain distance using solely electrical power (battery electric vehicles and plug-in hybrids). Here, a car capable of travelling 130 electrified miles or more currently attracts BiK at 13%, rising to 16% in 19/20 then falling to just 2% in 20/21.
From a policy perspective, it’s key to ensure that choice lists provide drivers with the opportunity to select vehicles that take advantage of the lowest BiK rates possible, while remaining viable from a business and personal mobility perspective (see AFV section below).
By doing this, the attractiveness of the company car benefit is maintained, and the business benefits from lower Class 1A National Insurance payments.
Alternative Fuel Vehicles (AFVs)
Closely related to the BiK issue above is the question of when and how AFVs should be introduced to the fleet.
The huge growth in the availability of vehicles using some form of electrification means that they are becoming viable and attractive options for more and more company drivers.
The added incentive of lower BiK tax rates means that drivers are likely to put increasing pressure on decision-makers to include AFVs on choice lists.
Fleet managers need to take a holistic view of this, balancing driver demands with critical factors such as vehicle suitability, potential reassignment issues and whole-life costs.
One way that the Government is helping businesses with the introduction of AFVs is through the availability of 100% First Year Allowance on vehicles emitting 50g/km CO2 or less. This additional tax relief is available until at least 31st March 2021. To learn more about this incentive click here.
For anyone unfamiliar with how AFVs stack up against more conventional fleet vehicles, consulting an expert is a must. CLM has produced a series of guides on AFVs that step decision-makers through the key considerations. Click here to view our AFV guides.
Popularity of cash
The fact that the size of the UK company car fleet has plateaued and even shrunk in recent years reflects the increasing popularity of cash allowances. This raises a number of issues for organisations which need to be reflected in the fleet policy. Considerations include:
- Does the policy have provision to ensure that private vehicles used for business journeys are correctly maintained and safe?
- Is there a process in place for checking that private vehicles are correctly insured for business use?
- Do licence checks extend to all drivers travelling on company business rather than just those with a company vehicle.
- What is the policy on the use of pool cars or short-term rental cars for those opting out of a company vehicle?
- How does the use of private vehicles impact on the organisation’s emissions objectives?
Most fleet decision-makers will be well aware of the duty-of-care issues related to a growing ‘grey fleet’, but a growing number of drivers opting for cash ramps up the pressure and potential headaches.
For many, re-establishing the company car as the preferred benefit choice is the most pragmatic way forward, so ensuring that choice lists contain a broad enough range of vehicles to appeal to those at different grades and life-stages becomes key.
Driver familiarisation and training
The average company car of 2018 carries technology that would have been unimaginable even at the turn of the century. From alternative methods of propulsion, to a host of semi-autonomous driver aids, to the vast connectivity options available, the modern car can be a dauntingly complex device.
While it always takes some time to fully understand the operation of a new car it’s essential that drivers can safely operate them from their first trip. This means ensuring that drivers receive a full familiarisation from the delivering agent and gaining written confirmation that this has taken place.
It’s also worth considering gaining a declaration from drivers confirming that they have read the vehicle instruction manual, fully understand how to operate it and conduct day-to-day maintenance and safety checks.
Even with the range of aids and safety features available, the driver’s skill level still plays a key role in accident avoidance and this can be increased considerably through defensive driving training.
Whether this is made available to all drivers or to those deemed to be at higher risk due to mileage covered or accident history is another important policy consideration.
Help and advice
Trying to keep on top of all the issues that can impact on an organisation’s fleet policy can be a difficult task. If you would like advice or a no-obligation review of your fleet policy please contact us here.
We have also put together a Fleet Policy Guide which gives a comprehensive view of all of the considerations that need to be made when creating a reviewing your fleet policy. To download your free copy click here.