Company cars v 'Mobility' Allowance

JamesC446

I want to scrap our company 'perk' cars am seeking some insight into what is the optimum option for my employees and as an employer moving forward. Todays our employees have an option of 1 o 2:

1. Supply a company car (£6k pa )
2. Supply a company car allowance (£6k pa)
3. Supply a pre-loaded card which has several forms of mobility attached. (Uber, Hertz , Tube , Santander bike) - (£6k pa)

My question is what liabilities for my employees and as an employer per year for option 3 or will it be treated the same as cash for car allowance ?

Has anyone ever considered option 3 ?

James

Grumpy_chap

I have never heard of option 3. 
Is that product even available? 
Option 3 sounds like a complex and restrictive form of option 2.  Unless it offers some significant (tax) advantage, what is the purpose of option 3?

oldbikebloke

you say perk so presumably there is zero business mileage claimed? If any is, option 3 sounds administratively horrendous as that would of course offset a tax liability.

- if the cards can be refunded for actual cash then they must be treated the same as pay, full PAYE through payroll for both employee and employer.

- if the cards cannot be cashed in, they count as non cash vouchers, so the purchase cost (not face value if greater) is declared on relevant employee's P11D for employee income tax & NI purposes, but for employer NIC, the employer will have to pay NI ER through payroll. 


PS you may want to think of a different name since "mobility allowance" could be confused with the disabled persons allowance.

Grumpy_chap

I agree with OBB that "mobility allowance" is easily confused as a term - I did from the title before reading the OP.  An alternative would be "transport allowance" or "travel allowance" but either of those could have tax implications (I do not know, just a consideration).

I think the OP is saying he wants to move his business from company cars to car allowance, but is willing to be more flexible in how employees then meet the travel needs of the business when travel is required.  Hence, the "option 3", though not clear that the "option 3 product" actually exists.

Most companies offering a car allowance set some rules around the age of the vehicle, type of vehicle, etc. so that employees are able to get to any meetings the business require them to travel to and present a "suitable" image to Clients.  So, the "option 3" could possibly be simply met by providing the "option 2" car allowance and aligning that with the more flexible rules that you are comfortable with as a business.  I can see how that can even be "spun" to employees and customers as "green" if the options allow employees not to have a car at all and use shanks's pony or public transport.  How will this work when an employee pushes the rules to the extreme resulting in possible adverse comment about the business (there will be one or several):

• 13 yo rust bucket car
• Outrageous "aspirational" sports car
• Horseback
• Inappropriate personal presentation because "business attire" is not compatible with running or cycling

This "option 2" with flexible rules does seem simple and straightforward from a tax perspective.

"Option 3" only seems to offer benefits if it offers something beneficial from a tax perspective compared to "option 2".

getmore4less

What is the primary objective?

"Scrap perk" is easy no cars or allowance with an agreeable salary adjustment.