Tax change drives company car shift
Written by Niamh Hennessy.
This article first appeared in the Irish Examiner on 04th April 2006.
Irish companies are changing their company car policies because of the harsh benefit in kind (BIK) tax regime.
This is according to a PricewaterhouseCoopers (PwC) survey on company cars, which indicated up to 40% of organisations say they are reviewing their car benefit policy or are planning changes this year.
Partner with PwC HR Services, Mark Carter said: “The indications from this survey are that many businesses have changed their company policy since 2004. The change has been primarily driven by the new employee benefit tax (BIK) rules introduced two years ago.”
Mr Carter said that apart from tax changes, other factors which have caused employers to reassess car arrangements include increased administrative demands since the introduction of employee benefit withholding tax, employee demands for benefit flexibility and pressure to achieve savings.
The most common car manufacturer for executives is Mercedes while BMW is the preferred choice for other directors and senior management. Volkswagen is the preferred car manufacturer for sales executives.
A car benefit is standard for almost all chief executives and company directors, while it is a standard benefit for just over 8% of supervisors and team leaders.
The average market list price for cars offered to senior management is just over 440,000, while the average annual cash alternative or car allowance offered to middle management is just over €10,000.
Senior manager, PwC HR Services, Maeve Heffernan said: “This report indicates that respondents with ‘car only’ policies are now in the minority.
“Some 40% of organisations indicate that they are reviewing their car benefit policy or are planning changes in 2006.”
The average annual cash alternative offered by position level is €18,000 for CEOs and €11,000 for senior sales executives.
Top Five Market price
1. Mercedes Directors: €51,000
2. BMW Senior management: €40,000
3. Jaguar Sales manager: €35,000
4. Lexus Middle management: €10,000
Irish Examiner, 4th April 2006
Niamh Hennessy
