Why companies should be offering personal contract hire to their employees

For businesses with company vehicles, speculation regarding the decline, or rise, of the company car has been around for years.

In the 90’s, a change in the benefit in kind (BIK) taxation system caused many scaremongers to suggest the company car was finally doomed, yet on it went!

Subsequent shifts in taxation have fuelled recurrent headlines as to whether desire for the company car, seen as one of the country’s best-loved employee benefits, recruitment tools and job necessities, will rise or fall.

The recent WLTP debacle (world harmonized light-duty vehicles test procedure) has been the latest ‘cat amongst the pigeons’.

As a result, some drivers have finally decided to call time on their company car, and the BVRLA (British Vehicle and Leasing Association) has reported a 24% increase in demand for personal contract hire.

Yet, just as one senses a shift away from company cars, the Government announces that pure electric vehicles will attract zero benefit in kind in year one, followed by very low levels thereafter.

Back the ‘pendulum swings’ as some industry experts predict a renewed resurgence in company-provided vehicles as drivers take advantage of a tax-free electric vehicle (EV). Teslas are popping up on our roads in greater numbers, alongside other all electric models, and its precisely what the Government intended as part of its carbon zero targets.

So, what should businesses do?

According to Shaun Barritt, CEO of the Grosvenor Group, the UK’s largest privately-owned contract hire and fleet management specialist whose offices are in Kettering, it’s time to accept that there will always be an ebb and flow towards and away-from the traditional company car, and businesses should be in a position to support both.

“Rather than focus on whether company cars are here to stay or not, businesses should change their viewpoint and look at how best to support their ‘mobile workforce’,” said Shaun.

“If you take an individual driver, who needs to use a car at work, whether they are in a company-provided vehicle or their own car, they still need to get reliably from A to B and reflect a positive image of the company by turning up in a car that is modern, reliable and in good condition.

“Consequently, companies should have two schemes operating side by side. A company car scheme and a personal leasing scheme.

“The problem many companies have is that as drivers opt out of the company scheme, taking cash in lieu of a car, employers end up handing over an amount of money every month with no control over how it is spent.

“That money is clearly meant to be for the individual to fund a vehicle that enables them to continue to do their job, yet it often ends up being used for other things leaving the employee with a vehicle that’s old, poorly maintained or not fit for purpose.

“A means of overcoming this is for companies to offer a strong personal contract hire (PCH) scheme that replicates the benefits of a company vehicle, with low deposits, maintenance cover, road tax, and breakdown cover.

“By offering a well-promoted PCH solution, drivers will be more inclined to use their monthly allowance to fund a new car. This has advantages for ‘grey fleet management’, the term used for drivers who use their own vehicle for business mileage, however its always important to have robust processes in place.”

Towards the end of 2019, Grosvenor Leasing launched a personal contract hire solution aimed at giving its corporate fleet customers greater choice.

The PCH scheme, run by a new, dedicated team from Grosvenor’s offices in Kettering, enables companies to give their staff access to a dedicated portal where they can enjoy the very best deals on new cars, mimicking the benefits of a company car for the private individual.

“Back in 2017, we recognised that businesses would need the ability to offer a company scheme and a personal scheme side by side,” continued Barritt.

“As a market leading corporate contract hire and fleet management provider, we therefore set our sights on developing an equally market leading personal leasing proposition to cater for the future needs of our customers and their drivers - either direct to drivers or via more formal staff Affinity schemes. This includes drivers’ families, partners and friends.

“Key personnel who are long-standing and highly talented fleet funding and management specialists, have transferred from our corporate business to run the new PCH division.

“They are on hand to advise customers, and drivers, on areas such as cash for car options, taxation, vehicle choices, electric vehicles and so on.

“It now means, irrespective of the twists and turns of company car taxation, our customers can enjoy the peace of mind of well-run company and personal leased vehicles, which we see as the perfect, flexible model for businesses moving forwards.”

For more information on corporate contract hire or personal leasing, contact Grosvenor Leasing on 01536 536 536 or visit www.thegrosvenorgroup.co.uk