Tag Archive | "company car"

Employers who provide Employees with Motoring Insurance – The risks….!

Providing motoring insurance to your employees creates various responsibilities and risks.

Risks for the Company

If it’s a company car and the driver is stopped for driving without insurance the company (or an individual within the company) can get a summons for permitting them to drive without insurance. If the company is summonsed it’s a fine. If an individual is summonsed it’s a fine and 6-8 penalty points. If the car belongs to the employee it can result in the company being accused of causing them to drive without insurance.

If the employee is driving for business purposes then they need business use cover. Otherwise they are still driving without insurance if they only have social and domestic cover.

Risks for the Employee

The employee is relying on the company to get it right and make sure the insurance is correct. The driver gets 6-8 penalty points and a fine for using a vehicle without insurance if they get stopped.

Statutory Defence for Employees

If insurance is not in force, a statutory defence is available to an employee in accordance with S143(3) Road Traffic Act 1988 if it can be shown;

1. the vehicle did not belong to him,

2. it was being used in the course of his employment at the time of the offence

3. and he neither knew nor had reason to believe there was not in force in relation to the vehicle such a policy of insurance.

The individual has to prove the criteria on the balance of probabilities. If however he does not fulfil or prove all the above criteria, he will be convicted of driving without insurance.

Special Reasons Arguments

In these circumstances, a Special Reasons argument may be available if to both the employer and the employee if they can show that they genuinely and honestly believed there was insurance in place and that this belief was reasonable.

The full criteria for Special Reasons are set out in the case of R v Wickens (1958). Special Reasons is not a defence but if found, no penalty points will be imposed. The burden is on the defendant to prove on the balance of probabilities that it was reasonable for him to consider he was insured. If the Court does not consider the belief was reasonable, they will impose between 6 – 8 points.

An example of this would be a delivery driver, driving their own van but being employed by a company. Prior to them commencing work, they discuss insurance with their employer and are reassured that they are covered under the company’s trade policy. It transpires that this is only the case if the vehicle is named specifically on the policy. This did not happen, as the employer did not realise, and the police stop the employee for driving without insurance. This would amount to a good Special Reasons for the employee.

Causing An Employee To Drive Without Insurance

If employees do not have insurance, employers also risk between 6 – 8 points for causing or permitting their employee to drive without insurance. Equally, they may have a Special Reasons argument if they can show they genuinely believed insurance was in place. In the above example, the employer would have to show it was reasonable that they did not realise they needed to add the vehicle to the insurance policy. If it was a simple case of the employer not reading the paperwork correctly, the argument is unlikely to succeed, however if the employer was told otherwise by the insurance company for example, this would amount to a good argument.

Types of Insurance Cover

It is not sufficient for insurance just to be in place. The employee must be covered for the driving purpose in question. This depends on the business type and why the employee is driving the vehicle. Some employers for example will allow an employee to take the company vehicle home of an evening and drive back to work the next day. Commuting and business cover is therefore required but the employer would also have to stipulate whether the employee is authorised to drive the vehicle outside of business hours. If agreed, social domestic and pleasure cover is also required. If not, the employer needs to make it very clear that the employee does not have permission to drive the vehicle for this purpose. To avoid potential prosecution, it would be advisable for the employer to provide written confirmation of the position.

If you have any questions or problems in relation to this or any other Motoring Offence Issue then contact Patterson Law.

Posted in Auto BlogComments (1)

2012 Company Car Tax

This isn’t the most exciting motoring topic in the world but it is important if you happen to drive a car supplied by your employer. Yes, From April 6th the rates of company car tax are changing. Governments talk about simplifying tax but it doesn’t seem to apply here. The tax you pay on a company car is based on a ‘benefit in kind’ (BiK) calculation. Basically this means that your employer giveth and the HMRC taketh away. If, as most people do, you earn more than £8500 per annum, then a supplied vehicle will be taxed. It is worked out thus, and I quote:

“You take the price of the vehicle for tax purposes – known as the P11D value (why?) and multiply it by the ‘appropriate percentage’. That figure is based on the car’s CO² emissions which can be found in the tables published by Her Majesty’s Revenue and Customs”.

Here’s a current example. “For a petrol car with a P11D value of £20,000 and a CO² output of 120g/km, it is 10%”. Doing the maths, ten percent of twenty thousand is two grand. That’s £167 per calendar month to you. There’s different figures for different types of car, petrol or diesel, for example and they range from 0 CO² to 225 and over CO² through no less than 34 tiny increments.

So now that the facts have sunk in, it is time to change them, as Fran Warburton of ALD Automotive points out:

“The threshold for using 10% … is shifting down from 120g/km to 99g/km”.

This means that, in the above example, the amount of tax levied will rise to £250pcm. That’s 87 quid! Warburton added:

“What’s interesting is that drivers of cars which are currently considered tax efficient – those emitting 100-120g/km – are the ones who will feel the most financial pain from 6th April. Their rate is rising by 5% yet drivers of higher CO² vehicles aren’t really being penalised by the changes because their rates are only going up by 1%”.

Many companies and drivers have overlooked the impact of the change which will increase the amount of BiK tax the user must pay, along with the effect on employer’s national insurance contributions. If you think that’s enough bad news, well, here’s some more: even if, as a driver, you are not planning to change your car this year the new rate still applies! It gets worse – there are more increases in the pipeline. Maybe it is time to look at alternative arrangements?

BIG P.S to this: Sneakily, the government – so supportive of motorists when in opposition – have hidden in the recent budget a decision that, from 2015, zero and ultra-low emission vehicles will be subject to BiK company car tax! So much for supporting business and individuals who try to go green!


Posted in Auto NewsComments (0)