Lease Car Scheme Policy and Conditions of Use Subject: Employee Benefits Date of implementation: Draft Version 2.2 10.08.06 Date of review: Person responsible for policy Implementation and review: Policy location: Director of Finance HR Policies and Procedures Manual 1. Introduction The Lease Car Scheme enables employees of the three Sandwell Primary Care Trusts who meet the necessary criteria to apply for a lease car. Provision of a lease car is not a contractual right of an employee and the PCT retains the right to refuse any application received. The Lease Car Scheme should contribute or meet the following objectives: The scheme should provide vehicles for business purposes with a priority for staff that provides clinical services. The scheme should encourage safer and better driving and be part of a wider PCT travel plan which considers environmental alternatives. The scheme should provide value for money for the PCT, be affordable, simple to operate and be understandable.
The scheme should be in accordance with family friendly and other policies within the PCT. The agenda for change new terms and conditions of service handbook states that lease car schemes should take into account the following principles; The scheme is voluntary and is offered to eligible employees. Employees shall be charged the full cost for private use. 2. Criteria for Applying The PCTs can offer a vehicle to an employee who is required to travel regularly on NHS business and who are eligible to receive a regular user allowance. Based on the new Agenda for Change terms and conditions of service handbook eligibility for a regular user allowance is follows: Employees are required by their employer to travel on NHS business and in so doing either: - Travel on average of more than 3500 miles per year; or - Travel on average of at least 1250 miles per year, and necessarily use their car on average of 3 days per week; or - Spend an average of at least 50% of their time on such travel, including the duties performed during the visits; or - Travel an average of at least 1000 miles per year, and spend and average of at least 4 days a week on such travel, including the duties performed during the visits. Employees will be based at their normal place of work, therefore home to base and return mileage will normally be considered as private. This is as per the travel expenses conditions. Where an employee travels directly to and or from work without going or returning to base, the business miles calculation will be assessed on the notional journey as if travel started and finished at the base or the distance actually travelled if less.
The viewing and testing of potential vehicles is the employee's responsibility, however under no circumstances should he/she commit the Trust to any agreements with supplying dealerships. Vehicles will be new and procured through the lease car contract from leasing companies as approved by the NHS Purchasing and Supply Agency (PASA). 3. Approval of Lease Car Provisions Before a Lease car is offered to an employee, approval will be sought from the employee's line/budget manager. Confirmation of the employee's previous annual business mileage claimed will also be sought from the travelling expenses section. The form for this purpose is set out within Appendix 1 attached to this policy. The PCT reserves the right not to approve the allocation of a lease car on the grounds of finance, efficiency or any other substantial reason. The reasons for refusals will be fully explained to individuals. 4. Terms of Hire The employee may apply for any vehicle of his/her choosing provided that it is capable of carrying three passengers and the driver. The allocation of a vehicle will commit the employee to a three-year agreement with the PCT. The lease is a legally binding document and termination charges as levied by the leasing company will apply if the lease is terminated before the original contract end date. The lease hire agreement will be made between the leasing company and the PCT, not the individual employee. The individual employee will enter into an agreement with their employing PCT for the use of the vehicle. On delivery of the vehicle the employee will be required to sign a lease car agreement form confirming: Receipt of the vehicle as ordered The vehicle is in satisfactory condition The agreed deduction from salary That the employee understands the PCTs regulations for the use of the car.
5. Maintenance and Repairs The scheme provides full maintenance of the car, which includes the cost of all servicing in accordance with the manufacturer's recommendation schedule including batteries, exhausts and repairs as a result of fair wear and tear. The costs of repairs or replacements necessarily due to deliberate abuse or wilful neglect are not included in the Lease Car Scheme. It is a requirement of the scheme that the car is kept in good condition. Therefore any additional charges incurred by the PCT will be recovered from the employee, as per Section 9. It is the employee's responsibility to ensure that the vehicle is made available for all routine servicing as recommended in the manufacturers' handbook. All servicing and repairs must be carried out at a service agent of the vehicle manufacturer. The employee will advise the service agent of the leasing company's name and the agent will obtain approval from the leasing company to carry out any repairs and servicing. The costs of such repairs and servicing will be settled directly between the service agent and the leasing company. The employee should not pay for any routine servicing or repairs as a result of fair wear and tear. When such maintenance is being undertaken the employee should request a courtesy vehicle. If a courtesy vehicle is not available the individual would be expected to make adequate arrangements for their own transport. Breakdown Assistance (i.e. AA, RAC or other organisation) is included in the scheme. Road Fund licence (tax disk) is also included in the scheme. Towing by the vehicle subject to the manufacturers handbook and approval from the leasing company is permitted. However if this results in any additional costs, rental or otherwise these will be paid be the employee. 6. Insurance The scheme provides a comprehensive insurance policy for both business and private use. The premium to be paid for insurance is a flat rate because it is the car that is insured and not the driver. Hence, it is
currently not possible for a staff member to build up a no claims bonus to reduce their personal insurance premium. However, in the event of an accident, an excess charge of 250 is payable by the employee whether on private or PCT business. This is to encourage safer driving and discourage multiple claims. Use by additional named drivers can be arranged by agreement with the leased car administrator. However this will be restricted to private use only. It will be necessary for the employee and any additional driver to produce current driving licences and provide details of any previous motoring convictions. In the event of an accident the employee must notify the lease car administrator within 24 hours who will then forward an insurance claim form, which must be completed and returned to the lease car administrator within 7 days. Any letters or notices received by the employee from a third party involved in an accident (e.g. the third party's insurer or other driver) should be sent to the lease car administrator. The employee should not contact the sender of the letter or advise receipt in any way. Any guidance issued by the insurance company must be adhered to at all times. The vehicle may be taken abroad provided that written permission is obtained from the leasing company and the PCT s insurance company. In such circumstances the lease car administrator should be contacted at least two weeks in advance of the departure date to make to necessary arrangements. The insurance company will issue appropriate cover/documentation and any additional costs will be charged to the employee. 7. Employee's Responsibilities It is in the employee's own interests to ensure that the car is kept in good condition. The employee is expected to: Keep the car s interior and exterior in a clean condition, at his/her own cost. Check the oil, water, battery, brake and any other fluid levels at weekly intervals and top up as necessary in between routine servicing.
Check tyre pressures and tyre condition and seek specialist advice if necessary. Ensure that the anti -freeze level in the cooling system is checked and maintained at the level recommended by the manufacturer. Ensure that the vehicle is made available at the intervals recommended for all servicing and maintenance and for it to be carried out by an approved service agent. Report any defects to the service agent. Ensure that tax disks are valid and displayed. The lease car administrator will forward a new tax disk to the employee each year as it becomes due for renewal. Ensure the reasonable security of the car at all times. Advise the lease car administrator on a yearly basis if there in any variation in the private mileage or the total mileage travelled greater than 10 percent from the proposed mileages. Submit business travel claims on a regular monthly basis. Conform to all instructions and recommendations in the manufacturer's handbook and other advice given by the leasing company or the PCT. 8. PCT Contribution The PCT will make the following contribution to the lease car scheme for each employee. The PCT will fund the annual rental of a base car currently deemed to be a Honda Jazz 1.2i DSI. This will be partially offset by a recharge for private mileage calculated using figures for the base car. The proportion of the insurance related to business mileage compared to the total mileage.
Petrol, diesel or alternative fuel reimbursement at rate of 11.7pence per mile. Class 1A National Insurance contributions on the benefit in kind. 9. Employee Contribution The employee will make the following contribution to the lease car scheme: Any rental cost in excess of the base car amount, i.e. the extra costs for a higher specification car or larger model. An amount of money for the private use of the car as set out above. The monthly amount would be determined by the PCT at the beginning of the agreement and will be fixed for the three year period of the lease with the exception of: - Any changes in VAT, insurance and any legislative provisions. - Any variations in mileage. The employee will be notified in writing of any changes in contribution payable due to the above factors. At the end of the lease period if the employee s actual private mileage has been exceeded, any excess costs levied by the leasing company related to this element will be recharged to the employee. The Road Fund License. A proportionate share of insurance based on the split between private and business miles. Diesel/petrol, oil, and any other fluids required outside normal repairs and servicing will be paid for by the employee. However the PCT will reimburse the employee for business mileage at the rate stated in Section 8. The employee will be responsible for the payment of all motoring fines, fixed penalty tickets and parking offences regardless of whether on private or PCT business.
It should be noted that driver details must be supplied to the police and local authorities if so requested. Worked examples of the estimated calculations are provided in Appendix 2 using the base car and a higher specification vehicle. 10. Income Tax The provision of a lease car under this scheme is considered to be a taxable benefit by the Inland Revenue. The PCT has a duty to advise the Inland Revenue of the details pertaining to the calculation of the value of taxable benefit each year. The key factors in determining the tax payable are based on the C02 emissions of the car and its on the road price. The minimum charge for a taxable benefit is 15 percent of the car's price and this will apply to cars emitting C02 at or below a specified qualified level. Diesel cars will be subject to a 3 percent supplement. It is recommended that employees visit the Inland Revenues Website: www.inlandrevenue.gov.uk for the full up to date guide of the Income tax position. 11. Petrol Reimbursement As stated in Section 8, the PCT will reimburse official business miles and the regular lump sum will no longer be paid. It is expected that the employee will consider other modes of transport such as walking, cycling, bus/train/metro and consider cost and environmental impact. 12. Early Termination of the Lease Car Agreement Should the lease car agreement be terminated before the original contract end date for any reason, then an early termination charge will be levied by the leasing company. Termination charges will be incurred by the employee under the following circumstances: Termination of employment by the PCT, i.e. dismissal. If the employee voluntarily leaves the PCT, e.g. resignation, voluntary redundancy or retirement. If the employee breeches any of the conditions of the scheme.
If the employee chooses to terminate his or her participation in the scheme. The PCT will try to minimise the termination costs wherever appropriate. The following options will be considered: If the employee is moving to another NHS employer then the option of transferring the car to the new organisation, with the approval of the leasing company and the new employer would not incur a termination charge. If the employee moves to a post within the PCT that does not require the use of the vehicle, the employee will retain the vehicle until the lease expires but would not be eligible to apply for another leased car. Transferring the car to another employee who will accept a second hand car. Costs will not be borne by the employee under the following circumstances: - On his/her death - On his/her compulsory redundancy - If the employee is absent from work for an extended period of sickness, approved training, career break, sabbatical, secondment or maternity leave and the employee no longer wishes to use the vehicle. If an employee is absent from work for an extended period of sickness, training, sabbatical, secondment or on maternity leave then he or she may continue to use the car for private use at the contracted charge. The employee can return the vehicle to the PCT and where financial hardship prevails as a result of such absence then the lease can be terminated at no financial cost to the employee. 12. Normal Termination of Lease Car Agreements At the end of the 3-year lease agreement the driver may: Apply for a maximum of a 12 months extension to the contract for the car.
Purchase the car based on a valuation as agreed with the leasing company. Return the car and submit an application for a replacement vehicle. Return the car and return to his/her own provision of transport and be reimbursed at the relevant rate. On return of the car at the end of the lease agreement the following will take place: The vehicle will be inspected in the employee's presence by the lease car administrator. The lease car administrator will advise the employee of any possible charges that may be made by the leasing company for any apparent damage. This will be a superficial inspection. The leasing company will then collect the vehicle and assessors appointed by them will make a further inspection. The employee will be required to reimburse the PCT for any repair costs, which are incurred. In the event of any dispute independent assessors may be appointed regarding costs and repairs and the PCT's decision based on the assessment will be final.