The Impact of Hybrid Working on Employee Car Benefits
Has the pandemic altered the way companies view their employee car benefits?Tags: Corporate ECOS
After the official lifting of lockdown on 19 July, offices across the country began the journey to the new normal. Although a few measures are still in place, and for some the working model will never quite be the same again, providing employees with a car provision remains a business need for many companies.
Despite hybrid working being more popular than ever post COVID-19, the need to provide an employee car benefit is unlikely to ever completely disappear. Therefore, the changes that have been made to the world of work don’t need to have a significant impact on company car fleets.
Now that commuting to the office has started to return as a more regular occurrence and face-to-face meetings are picking up again, after 18-months of digital video conferencing platforms, commuting mileage is increasing. The latest figures available from the Department of Transport states the average business mileage of a company car is 9,400 per annum.
Similarly, on a personal level, travel is increasing as social and retail outlets are now open again. Restrictions on international travel has meant that holidaying in the UK has increased in popularity meaning personal mileage is rising too. The Department of Transport lists 4,900 miles as the average per annum for company cars and 4,400 miles for personal cars when it comes to private mileage.
As we continue to adjust to the new normal, it is more crucial than ever to ensure the car benefit programme is suitable for both employers and employees. In line with a lot of companies now providing a hybrid working solution, a flexible employee car benefit might be the most appropriate.
While the well-established options for employee car benefits – company cars (often delivered via contract hire) and salary sacrifice do offer some flexibility, the lesser known option, an employee car ownership scheme (ECOS) arguably offers even more flexibility.
Flexible contract duration and mileage are available on an ECOS, meaning it can be tailored to specific business needs. With savings that can be made by implementing an ECOS, you can reduce your costs and increasing profit, allowing for greater flexibility for expenditure elsewhere.
But what exactly is an ECOS?
It’s unlike other employee car provision options because the employee is the owner of the car from the outset. As the vehicle is owned by the employee and they make repayments on the car, an ECOS removes the company car tax liability for the employee and the cost of Class 1A National Insurance Contributions (NICs) for the employer. This provides significant business savings in comparison to the traditional company car schemes. These savings can be shared with employees at the employers’ discretion.
As the cost of company car tax increases, particularly for essential users in ICE vehicles, ECOS is becoming a more cost-effective option for both employers and employees. This ECOS structure is recognised by HMRC, to read more about it, click here.
An ECOS for your business could help you:
- Create financial savings for car benefits across the combined economic family.
- Provide you with complete control over the car policies and benefit levels.
- Allow you and your employees to have a vehicle that best fits their collective needs without external influence or restriction.
- Future-proof your car benefit.
You can learn more about our Corporate solutions here.
Car Benefit Solutions is a specialist provider of employee car benefits, so if you would like more information about how we can help you and your corporate fleet, please get in touch.