British Government should be aware of the negative green and safety impact of taxing ECOs, GE Fleet Services to warn 

The British Government should be aware of the results of taxing employee car ownership (ECO) schemes because of the likely negative impact on environmental and safety aspects, GE Commercial Finance, Fleet Services, is to warn. 

The company will give this message to HM Revenue and Customs advisers in June when it takes part in the consultation process over the taxation and environmental impact of ECO schemes announced by the Government as part of the last Budget. 

GE Fleet Services is convinced that taxing ECO contributions by employers, which are currently tax free, could lead to more companies adopting uncontrolled cash for car schemes which would, in turn, see more poorly maintained, higher polluting vehicles adopted for use as day-to-day company transport. Gary Killeen, head of structured finance, explained: At the heart of this debate is the difference between ECO schemes and cash for car.  An ECO scheme sees a company give it s employees the option to move out of traditional company cars in a controlled and well managed fashion, ensuring that they drive well maintained, safe and environmentally responsible vehicles. 

In contrast, cash for car means that an employer is basically attempting to opt out of any responsibility for the cars driven on business by their employees.  As a result, the cars used are generally older, more polluting and not maintained to the standard of a company car or ECO vehicle.  Killeen warned that GE Fleet Services own figures confirmed that cars bought by employees under cash for car schemes tended to have a much higher average age and CO2 output than ECO vehicles or conventional company cars, and that employees often had a lax attitude towards maintenance, resulting in compromised safety. 

Instead, properly managed ECO schemes, such as those put together by GE Fleet Services Key Solutions team, provided almost as much control over employee car use as the operation of a normal employer-managed fleet. He continued: The Government has done a lot of work in recent years to improve the environmental and safety aspects of operating company cars, and taxing ECO schemes would be a retrograde step because it could encourage employers who want to move out of traditional company cars to adopt uncontrolled cash for car policies. 

In the past, the Government has been responsive to the consultation processes that it has held with the fleet industry, and we hope that this is the case again.  Killeen added that ECO schemes made up only a small proportion of the fleet market but that there were signs that their popularity was increasing. He explained: We estimate the total ECO market in the UK to be little more than 100,000 cars out of a total fleet sector of something like 3 million.

However, we have certainly seen an increase in take up over the last 12 months because ECOs represent a good solution for responsible companies that want to provide flexible benefits packages. To make these schemes less attractive through taxation makes little sense.