The government intends to introduce further legislation to reduce congestion on our road network. This is an obvious problem that must be faced and it is right that steps should be taken to reduce the existing problem and potential growth, particularly within larger towns and on our major roads.
However, it is very likely that the government will start to tackle this problem by increasing taxation on company cars.
While I agree with the overall objective, company cars and drivers should not be singled out and treated any differently from other vehicles and road users.
The provision of company vehicles falls into two categories perks and necessity. Hence, any taxation for these two categories should be considered separately perks should be taxed as income but necessity should not.
As managing director of a construction company that provides certain members of staff with company vehicles, it is clear to me that they are provided not as a perk but as a necessity of the job.
It is true that, by being provided with a company vehicle, the employee is freed from a significant financial burden, and through this is given a degree of security and benefit from the feel good factor that goes with it.
As a company, we feel that this security makes staff more committed to the firm. And since employees do not have to overtly worry about transport and its cost, they are more able to dedicate time and effort to the company and their job. They are less likely to be distracted from work due to a pressing and costly car repair, for instance.
However, the decision to provide a car is also based on the envisaged business use. There is of course a cost associated with this decision but it means that the company is better able to plan financial budgets.
If employees were to provide their own transport, the standard of vehicle used would not necessarily be the same standard as we would provide in fact it is quite likely to be of a lower standard. Therefore dependability and reliability may well be reduced, impacting negatively on our business and our customer relationships.
This consideration also applies to the corporate image of the company which is reflected by the type of car and its condition turning up to a clients office in a rusting, ill-maintained car or a brand new sports car does not necessarily set up the desired first impression of your business.
Bearing these points in mind, the decision to provide a vehicle does not necessarily rest on the amount of business travel number of miles but more on whether there is an actual need to travel for the job.
Typically, our contracts are located on sites within 8km of our offices and up to as far away as 400km. Hence travel for staff working on these contracts is not simply dependent on distance they have to travel. The need for a car at work is more related to use and frequency of use. Our location within rural North Yorkshire excludes reliance on public transport. Staff often have to be recruited from outside the local area, requiring their own transport not only for business use but also to get to work and for domestic use.
The nature of the construction market means companies are unable to dictate the location of site operations and have to be prepared to work within a wide geographical area. Nor is it always possible to recruit staff living near to the sites. Travelling is a fact of life within the industry.
Our policy is to employ staff on long term rather than on a job-to-job basis. Due to the relatively short duration of typical contracts it is not realistic to expect staff to relocate adjacent to sites so, again, travel and use of car is a necessity. Site locations and irregular times of travel and work mean that the use of alternative modes of transport is generally impractical.
Part of my role as managing director is to boost the morale of my staff, to give employees responsibility and awareness, to make them feel important and secure. Providing a company car as part of their remuneration package goes towards this and also benefits the company, our business and our customers.
Therefore, as preparations are made for its integrated transport White Paper, the government should review its perception of company car taxation and in particular how it is applied within the construction industry.
William Ross is managing director of Severfield-Reeve DesignBuild in North Yorkshire.