Many businesses that can no longer afford to run fleets give employees the cash to buy their own cars.
Phoenix Group Holdings has a scheme that offers vehicles plus insurance. It has just extended the scheme to include a buy-back facility at the end of each year for some of the 90 cars on its list, along with a competitively priced maintenance package.
'The scheme provides low-mileage vehicles to people who would normally get a company car,' said Nicholas Moger, managing director of Phoenix. 'Instead of buying a fleet from one manufacturer, a company can come to us and ask for, say, 14 Cavaliers and three BMWs. We will find them exactly what they want, in their price bracket, saving them time, money and hassle.
'We will get the cars insured, with a 60 per cent no-claims bonus, which is not normally available to people who are buying their company cars. The company pays a deposit of 8 per cent, and monthly payments for the purchase plus insurance over the three or four years of the contract.'
It was costing one company pounds 9,769 a year to provide an executive with a Rover 820Si. He was doing approximately 5,000 business and 10,000 private miles. By having his own car and receiving from his employer an allowance for business miles of pounds 1,700 (in accordance with the Inland Revenue's allowable rate per business mile), he would need a salary increase of only pounds 3,595 (as a higher-rate taxpayer) to have the same car and be just as well off.
Another company was paying pounds 5,511 to provide an employee with a Ford Mondeo 1.8 GLX. He was doing 4,500 business miles and 22,000 private miles a year, and paid tax at 25 per cent. Under the Revenue rules, he received a business mileage allowance of pounds 1,530, so he would need an extra pounds 3,550 to buy and run the car.
'Because we supply cars with low mileage, the company doesn't have to bear depreciation costs, and therefore can give the employee less cash for the same car, or the same amount of cash for a better car,' Mr Moger said.
'Companies who decide on this route realise they can afford to be generous because they're making administration and other savings that are not quantifiable, and many give all the saving to the employee; most give at least half.'
Mr Moger set up the company in 1987, after buying cars on behalf of friends and finding he could make money from it.
Phoenix Group Holdings is at Astore House, Padholme Road East, Peterborough PE1 5XL (0733 555566).
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