Under a third (29%) of respondents cannot explain how having a company car impacts on their taxes, and simply accept the amount that comes out of their pay packet, according to research by vehicle supply organisation OSV.
Its survey of 759 individuals also found that 51% admit that they still do not understand the benefit-in-kind tax regulations in relation to company car use.
Andrew Kirkley (pictured), joint director at OSV, said: “The [benefit-in-kind] regulations aren’t the easiest to understand, but it’s really important that drivers try to get their heads around the facts if they wish to avoid paying more than they need to. [Around] 55% of new cars registered in the UK are fleet cars, and businesses will often give employees a choice of motors, but that decision could have really big implications for drivers’ wallets. By choosing a diesel over a hybrid for example, they could be significantly out of pocket in the long run. Remembering to declare part-time use could also affect a driver’s outgoings.”
More than half (54%) of respondents are not aware that part-time company car usage can lower their benefit-in-kind rate, and 30% do not know whether the choice of electric, diesel, petrol or hybrid vehicles can impact their benefit-in-kind rate. Over half (53%) of respondents believe that company car tax is based purely on the cost of the new car. “Having a company car can really make financial sense, but [employees] have to make sure that [they] get the best deal and understanding [benefit-in-kind] is integral to that,” Kirkley added.
More than a fifth (27%) of respondents have declined a job offer when a company car was not included, and 49% of respondents would even consider accepting a job offer that did not appeal to them if a car that they could not afford privately was included within the benefits package.
Kirkley said: “Company cars have always been one of the top employee perks and it’s interesting to see how businesses can use that to secure the best talent. However, it is a bit of a worry that there’s such confusion over what company car use can mean for employees.”