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Cash allowance expansion grinds to a halt

Date: 14 February 2007   |   Author: Nick Gibbs

The much-debated swing from company cars to cash allowances could have reached the end of its trajectory, according to a survey from lease firm Alphabet.

The number of companies stating that they were 'more likely' to offer cash allowances instead of cars in the future has fallen from half to less than one in five in the space of 18 months.

Back in April 2005 a statistically negligible amount said they'd go the other way and switch back to company cars, but by December last year that figure had climbed to one in 10. The majority (63% - see the table right) said they were happy with their current arrangement.

The top reasons for withholding the cash allowance were: duty of care, the success of the current policy and the fact that the right car was needed for the job. The chief reasons for being pro-allowance were tax advantages and employees preference. Fleets against a return to company cars were predominantly smaller and cited increased costs and admin headaches as reasons not to go back.

Unsurprisingly, only tax or financial incentives would persuade fleets to return to an all-company car regime. Just 1% cited safety as the decisive factor.