NHS South Tees CCG. Lease Car Policy

NHS South Tees CCG Lease Car Policy Policy Title: Lease Car Policy Date: July 2013

1. Introduction NHS South Tees CCG Guide to Scheme Principles and Conditions for Employees NHS South Tees CCG has in operation two Lease Car Schemes, one scheme which enables permanent employees that meet the necessary criteria to be allocated a contribution towards a lease car and one that is open to all employees who are permanent members of staff to have access to a lease car through a Salary Sacrifice Scheme (See paragraph 13). South Tees CCG can offer a contribution of 2,900 to a vehicle to a permanent member of staff who will use the vehicle in the execution of their official duties and are:- A South Tees CCG contract holder required to travel over 2,500 business miles per annum. A South Tees CCG contract holder who does not meet this mileage level but is an essential user. This will be at the discretion of the CCG. The employee is entitled to choose a vehicle which costs more than the contribution. However, the employee would be responsible for any additional costs. More information on the schemes is detailed in the following. 2. Use of Car 2.1 The car can be used for business and normal domestic and pleasure purposes by the employee and anyone approved by the insurers and the CCG (see paragraph 11 regarding insurance excesses). 2.2 The lease car can be taken abroad. The employee will require an Insurance Certificate, (from NHS Fleet Solutions) and the employee will also be required to contact the leasing company to see if any further insurance cover needs to be taken out. 3. Terms of Hire 3.1 The allocation of a vehicle will commit the employee to a three-year agreement with South Tees CCG (see paragraph 8 regarding early termination of hire). 3.2 Whilst participating in the Scheme employees will be required to have the vehicle at their disposal for official business whenever required. 3.3 In exceptional circumstances South Tees CCG may offer a car that is not new if it has been released following the termination of use by another employee. In such cases the period of use will be the unexpired portion of the three-year period and the contribution will be based on the original charge when the car was first supplied. 3.4 Employees will be required to sign an End User Agreement and comply fully with the terms and the Drivers Handbook.

4. Costs Borne by the Employee 4.1 In return for private use of the car, employees will be subject to an annual charge on a monthly basis through deduction from salary. The contribution is calculated as follows:- a) A lump sum per annum which is directly related to the annual costs of providing the car for private use; b) The cost of manufacturers fitted options and dealer fitted accessories chosen by the employee in excess of those fitted on the base vehicle; c) The CCG will charge VAT to the employee on the total of costs calculated in (a) and (b). 4.2 Once a car has been supplied, the gross lump sum contribution, based on agreed estimated mileages, will be fixed for the three-year period. Changes in VAT, Insurance, Road Fund Tax and other legislative provisions are the only factors that can change the contribution paid except for variations in previously agreed mileages. Any changes in contributions will be discussed with the employee before implementation. 4.3 At quotation stage the employee will stipulate the number of miles they would like to do in the car on an annual basis and the quote will be tailored to their needs. If at the end of the leasing period the actual annual mileage (pro rata) exceeds the agreed mileage (pro rata) over the course of the lease, the employee will be liable to an additional charge based on a cost per additional mile. The individual circumstances will be considered in consultation with the employee as to whether or not the charges are on private or official mileage. 4.4 The charge will be that applicable at the time of quotation and will remain fixed for the three-year period of the agreement (except for circumstances outlined in paragraphs 4.2 and 4.3). 4.5 Employees will pay for all fuel, together with oil and other fluids required outside normal repairs and servicing, but will be reimbursed in respect of fuel for official mileage (see paragraphs 5 and 6.2). 4.6 Fixed penalty fines will always be the responsibility of the employee. Any fines passed to the Contractor by the Police/Local Authorities, in accordance with current legislation, will be passed to the employee for immediate clearance 4.7 Towing by the vehicle is permitted subject to the instructions in the Driver s Handbook, but the cost of the necessary towing equipment and electrical modifications will require to be borne by the employee. Agreement by the Contractor must be obtained prior to any modifications being undertaken.

5. Cost of Fuel for Business Mileage 5.1 The employee will be reimbursed official mileage fuel costs via the Travel Claims Section in accordance with the current lease car mileage rate in operation at the time. This replaces the higher rate standard. 6. Maintenance and Repairs 6.1 The Scheme provides for full maintenance which includes the cost of all servicing in accordance with the manufacturer s schedule, repairs, replacement of tyres, batteries, exhausts etc. A replacement vehicle may be supplied when the repairs, other than for normal routine servicing, to the vehicle are anticipated to take longer than 24-hours. 6.2 Servicing and repairs will be carried out at service agents of the vehicle manufacturer convenient to employees that have been specifically approved by the Contractor. A driver s pack will be issued with each vehicle which clearly details how repairs and servicing of the vehicle will be arranged and all costs will normally be settled direct between the nominated garage and the Contractor. In the event of emergency repairs being required for which the driver is required to pay, the Contractor will reimburse the driver in full upon receiving receipt for the value of the work undertaken. 6.3 Breakdown services are included within the scheme at no additional cost to the employee. 6.4 The cost of repairs and replacements to, for example, tyres and bodywork due to deliberate abuse or wilful neglect are not normally included in the contract hire agreement. Any such costs which the Contractor considers to be appropriate that are charged to the CCG may be required to be reimbursed by the employee, on receipt of details of the amount due and the circumstances involved. 7. Employees Responsibilities 7.1 Rental charges are determined by the Contractor on the assumption that the cars will be kept in good condition and to the same high standard as if the cars were owned by the employee. It is therefore in the interest of all parties that this standard is maintained particularly in ensuring that the cars retain their book value when returned at the end of the contract. 7.2 The employee has a specific responsibility for the following:- a) Keeping the car in a clean condition, at the employee s cost. b) At regular intervals checking the water, oil, battery, brake and any other fluid levels, tyre pressure and conditions of tyres and topping-up as necessary. c) Ensuring that the anti-freeze level of the cooling system is checked and maintained at the level recommended by the manufacturer. d) Observing the recommended running-in speeds where appropriate. e) Reporting defects promptly to the nominated garage or as otherwise instructed by the Contractor or the PCT.

f) Ensuring that servicing and maintenance are carried out by the nominated garage at the intervals recommended by the Contractor. g) Obtaining approval for repairs above any cost specified by the Contractor and ensuring that invoices are submitted if required as instructed by the Contractor. h) To report to the CCG in advance, should the employee foresee that estimated mileages are to be exceeded. i) Ensuring that Road Fund Licences are received from the Contractor and displayed by the due date. j) Ensuring the reasonable security of the car at all times. k) Conforming to all instructions and recommendations in the manufacturer s handbook and all other instructions and advice given by the Contractor or the CCG. 7.3 The employee should bear in mind that he/she will be personally liable for the car s road-worthiness in accordance with legal requirements as if he/she were the owner of the vehicle. Employees should not service, repair or adjust the vehicle themselves (other than as mentioned before) and in particular must not interfere with the mileage recorded (odometer). 7.4 The employee is under a duty to report all damage or defects accordingly. Where an employee has damaged the vehicle due to failure to maintain or due to neglect of maintenance or non-reporting of defects, then he/she is liable to pay for the resulting repairs. 8. Early Termination of Hire 8.1 The employee s right to a car within the Scheme would automatically be terminated on the termination of his/her employment with the CCG or in the event of CCG abolition. In the event of an employee s death, there will be no penalty incurred by the employee s estate as a result of early termination of hire. In the event of the employee s retirement, there will be no penalty incurred by the employee 8.2 The employee s right to a car within the Scheme may be terminated by the CCG at its discretion in the following circumstances, each case being considered individually on its merits: a) By the employee s breach of any of the conditions of the Scheme. b) In the event of the prolonged absence of the employee from normal duties. c) When the employee s contributions cannot be recovered from his/her salary. d) When in very exceptional circumstances, it is agreed by the CCG that an employee may terminate participation in the Scheme. e) Abolition of the CCG. f) Any other very exceptional circumstances not provided for in (a) to (e).

8.3 When an employee s participation or right to participate in the Scheme is terminated in the circumstances set out previously, the employee may be required to reimburse the CCG for any payment due by the CCG, to the Contractor because of the premature termination of the agreement between the CCG and the employee. The employee may, however, have the following options available: a) Buying the vehicle at current value, including settlement of any contractor penalties for early termination or concluding a new lease contract direct with the Contractor for the remainder of the hire period subject to the consent of the Leasing Company. b) Similarly, if an employee s new employer is prepared to have the lease transferred to them, this is acceptable subject to the consent of the leasing company. c) However, in the event of the employee being made redundant or the CCG abolition the liability to meet the outstanding term of the lease will be incurred by the CCG, unless a) or b) above is available. 8.4 Upon termination of the employee s participation, or right to participate in the Scheme, the employee must return the car as directed and shall pay any outstanding contributions for private use which will be calculated up to the date of termination. 8.5 In the event of the employee s death in service, or on early termination of the employee s employment contract on the grounds of ill-health, there shall be no financial penalty to the employee or his estate in account of the early termination of the contract for private use of the Lease Car. 9. Normal Termination of Hire At the end of the three-year agreement, the following procedure will apply: 9.1 The car will be appraised for condition by the Contractor and an Officer of the CCG in the presence of the employee. The employee may be required to reimburse to the CCG, the cost of any repairs considered to be needed to bring the car into good condition, taking fair wear and tear into account. In the event of any dispute, independent assessors may be consulted on costs and repairs involved and the CCG s decision based on this will be final. 9.2 The contract of hire will then be terminated for the allocated vehicle and a replacement vehicle will be provided where required, but costs will be calculated on prices ruling at that time. 9.3 The old car will be available for sale to the employee at the end of the three-year period based on a valuation agreed direct with the Contractor, and the CCG shall not be involved in any such sale.

10. Termination of Hire by Contractor 10.1 In the event of the contractor terminating the Agreement for any reason, the CCG shall be entitled to terminate this Agreement forthwith and without further notice, whereupon the employee will, without hindrance, permit and enable the CCG or the Contractor to repossess the vehicle. 11. Insurance 11.1 The car will be insured for the employee and up to four named drivers (assuming they are legally entitled to drive). Subject to the term and conditions set by the lease car administers. 11.2 It should be noted that an employee could lose No Claims Discount benefits when arranging insurance for their own car after terminating an agreement with the CCG. Most insurance companies will request a letter from the CCG confirming that the individual has had no accidents whilst under the NHS insurance and will automatically continue No Claims Bonus accordingly. Employees should be aware, however, that not all insurance companies will accept this and may reduce No Claims Discount accordingly. 11.3 The driving of any vehicles by an employee other than the vehicle provided by the CCG is not included within the insurance policy. 11.4 Excesses may be payable on the insurance policy dependent on the terms therein. 12. Income Tax Implication The provision by the employer of a car which can be used for both business and private mileage is assessed as a benefit in kind. The current regulations are as follows:- The annual benefit is a percentage of the list price based on the carbon dioxide (CO2) emissions of the vehicle. The annual benefit is reduced: Pound for pound for contributions by the employee for private use of the car. The Inland Revenue assesses the tax due each year and normally recovers it through PAYE by adjustment to the employee s tax code. 13. Salary Sacrifice 13.1 A salary sacrifice happens when an employee gives up the right to part of the cash remuneration due under his or her contract of employment. Usually, the sacrifice is made in return for the employer's agreement to provide the employee with some form of non-cash benefit i.e. a lease car. The sacrifice is achieved by varying the employee's terms and conditions of employment relating to remuneration. For example, an employee's current contract provides for cash remuneration of 40,000 a year with no benefits. The employee agrees with the employer that for the future the employee will be paid cash remuneration of 34,800 a year and the use of a fully maintained lease car. This would be referred to as a salary sacrifice. All the terms and conditions above will apply to the Lease car obtained through salary sacrifice.

13.2 When a company car is made available for the private use of an employee a 'benefit in kind' value is calculated in relation to the car. The 'benefit in kind' is calculated using a formula relating to the % CO2 emissions of the vehicle and the manufacturers list price of the vehicle. The benefit in kind amount will be recovered by HMRC via a change in your tax code. The necessary information will be sent to HMRC upon delivery of your car; however, HMRC may take a period of time to adjust your tax code. The above is subject to amendment and individual employee s should check their tax liability before entering into a lease car agreement.

NHS South Tees CCG Process for Ordering a Lease car through the Contributory Scheme 1. An employee who is entitled to a lease car with a contribution, contacts NHS Fleet Solutions for quotations via telephone, fax or email. A quote is produced and emailed back to the employee. 2. This process is repeated as many times as required until the employee either no longer wants any further quotes, or decides they wish to order a car. If the employee wishes to order a vehicle they fill out the Order Request Form (Appendix 1) and send to NHS Fleet Solutions along with a copy of their driving licence. The employee will then receive a contract (Appendix 2) from NHS Fleet Solutions, detailing the car ordered, accessories and the mileage agreed, to be signed by the employee. 3. The CCG will receive a contract (Appendix 3) from NHS Fleet Solutions to be authorised at the same time as the employee. 4. Once NHS Fleet Solutions receive both signed contracts they will order the car and agree a delivery date with the employee.

NHS South Tees CCG Process for Ordering a Lease car through Salary Sacrifice Employee 1. An employee contacts NHS Fleet Solutions for quotations via their website, telephone, fax or email. A quote is produced and emailed back to the employee. 2. This process is repeated as many times as required until the employee either no longer wants any further quotes, or decides they wish to order a car. a. If the employee wishes to order a vehicle they accept the quotation online and prepopulated paperwork is emailed to their preferred email address instantly. When the vehicle is ready for delivery NHS Fleet Solutions will send a driver pack to the driver which includes b. Policy Brochure c. Engraved keyring with website address and 24/7 accident management number d. Driver Safety Book e. Driver Handbook 3. The employee checks the order forms. They sign both copies of the order form, and get their line manager to countersign; they also sign both copies of their variation of contract. They are then required to send a signed copy of each back to NHS Fleet Solutions along to approvals@nhct.nhs.uk Employer 1. Once NHS Fleet Solutions receive the signed order form and variation of contract, from the employee, they will send both these documents along with a contract between NHS Fleet Solutions and the organisation (which includes a reconciliation of your expenditure and savings) across to the co-ordinator via email. 2. We ask that the co-ordinator checks the following: Whether they are a permanent employee of your organisation Check the salary details are correct Check the contracted hours are correct Check the tax code is correct Check the employee has given the correct information re: the pension scheme (i.e. Are they in it or not). Check if the employee has any existing salary sacrifices 3. If any of the above details are incorrect, the co-ordinator sends the documentation back to NHS Fleet Solutions advising them of the incorrect details and we will go back to the employee to amend the documentation. 4. If the above details are correct, the co-ordinator is required to sign the contract and email the scanned documents back to NHS Fleet Solutions Sales@NHCT.nhs.uk AND approvals@nhct.nhs.uk or fax back to them on 0191 2934293 5. Once NHS Fleet Solutions receive the signed contract from the co-ordinator they will order the car. They will not order any cars without this signed contract. Appendix 1

Trust Lease Car Scheme Order Request I apply to join the Trust lease car scheme and confirm that I have received and read the Trust s policy document and information sheet. I acknowledge receipt of the quotation(s) detailing the charges associated with the lease scheme and have chosen the following model: Make Model Colour Options/Interior/Trim Colour Options Continued Quoted monthly contribution* *The quoted price is subject to final confirmation from the leasing company. I agree to monthly deductions being made directly from my salary. I understand that the car will be ordered on my behalf and I shall be bound to the scheme until the contract formally expires or my employment with the Trust ceases. I understand that all costs associated with the acquisition, use, maintenance or repairs of the car which result from loss, neglect, misuse or misadventure not indemnified by insurance or included in the lease contract will be my responsibility and may be deducted from my salary. I accept that any additional costs incurred by my early termination of the contract or excess mileage costs resulting from additional private mileage, will be my responsibility and may be deducted directly from my salary. I accept that in the event of any accidental damage to my vehicle, I am liable to pay the insurance excess in line with Insurance Company policy. I accept the terms of the lease scheme and agree to be bound by them. Name Signature Date Contact No. Please return with a copy of your current driving licence to: NHS Fleet Solutions Finance Department 7-8 Silver Fox Way Cobalt Business Park Newcastle upon Tyne NE27 0QJ Fax: 0191 2934293

Appendix 2 NHS Fleet Solutions Contract Name Organisation NHS South Tees CCG Mileage NHS Fleet Solutions Unit 7/8 Silver Fox Way Cobalt Business Park Newcastle upon Tyne NE27 0QJ Tel No. 0844 8118228 Email : enquiry@nhsfleetsolutions.co.uk Make Model Engine Size Fuel Body Type No of Doors Transmission Colour Accessory 1 0 Accessory 2 0 Accessory 3 0 Accessory 4 0 Accessory 5 0 Accessory 6 0 Accessory 7 0 DECLARATION Signed. Print Name.. Date Please return this form, duly signed and dated to NHS Fleet Solution, Unit 7/8 Silver Fox Way, Cobalt Business Park, Newcastle, NE27 0QJ

Appendix 3 NHS Fleet Solutions Contract Name Organisation NHS South Tees CCG Mileage NHS Fleet Solutions Unit 7/8 Silver Fox Way Cobalt Business Park Newcastle upon Tyne NE27 0QJ Tel No. 0844 8118228 Email : enquiry@nhsfleetsolutions.co.uk Make Model Engine Size Fuel Body Type No of Doors Transmission Colour Accessory 1 0 Accessory 2 0 Accessory 3 0 Accessory 4 0 Accessory 5 0 Accessory 6 0 Accessory 7 0 DECLARATION NHS South Tees CCG authorises Northumbria Healthcare NHS Foundation Trust to order the above car and deliver it to XXX. For the absence of doubt this means, NHS South Tees CCG agrees to make 3 annual payments of XXX to Northumbria Healthcare NHS Foundation Trust, the first payment being due on the date the car is delivered. Insurance is included within this price. Signed. Print Name.. Designation Date Please return this form, duly signed and dated to NHS Fleet Solution, Unit 7/8 Silver Fox Way, Cobalt Business Park, Newcastle, NE27 0QJ