The Fleet Industry is full of acronyms and with this guide we seek to provide a simple glossary of terms.
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BCH - Business Contract Hire, a type of financing where a business leases a vehicle without owning it by paying monthly instalments over a fixed period of time.
Benefits in Kind - Perks or benefits which employees or directors receive as part of their employment which are not included in their salary or wages, such as a company car.
Benefits in Kind Tax - Company Cars are taxed according to their value, fuel type, level of CO2 emissions and the amount of time the vehicle is unavailable during the tax year.
Contract Purchase - A type of financing where a business or person finances a vehicle, with or without an upfront payment, followed by monthly payments over a fixed duration. At the end of the duration, the borrower may choose to pay the remaining value to purchase the vehicle.
Daily Rental – A type of financing where you hire a vehicle from just 1 day, paying for each day you have the vehicle.
Employee Car Ownership Schemes – An alternative to traditional company cars, ECO schemes see the employer offer an employee a monthly salary allowance to spend on a car of their choice. The employee has legal ownership of the vehicle, meaning that neither the employee nor employer are subject to company car tax.
Grey Fleet – A term used to describe vehicles used for business purposes but not owned by the company. This might include a vehicle purchased via an employee ownership scheme, a privately rented vehicle or a vehicle privately owned by an employee.
IFRS 16 – An International Financial Reporting Standard providing guidance on accounting for leases.
Intelligent Mobility – A philosophy of using technology and data to move people and goods efficiently using all transport modes.
Mileage Pooling – a service that allows under-mileage vehicles to be used to offset against excess mileage charges.
P11D value - The P11D value of your car is used to calculate the amount of company car tax you pay, comprising of list price, including VAT, plus any delivery charges. It does not include VED or first registration fee.
PCH - Personal Contact Hire, a type of financing where a person leases a vehicle without owning it. It consists of an upfront payment followed by monthly payments over a fixed duration.
PCP - Personal Contract Purchase, a type of vehicle financing where you pay monthly instalments against the depreciation of the vehicle over a fixed term, rather than the total value of the car. At the end of this term, you have the option of paying off the remainder of the vehicle’s finance balance and keeping it, handing the vehicle back and walking away, or using the value of the car to broker a deal on a new car.
Salary Sacrifice - A Salary Sacrifice car scheme uses a portion of your salary before taxation as a fixed monthly instalment for a new car, including depreciation, interest, insurance, breakdown cover and maintenance.
Sale and Leaseback - A transaction whereby you sell your vehicles to a leasing company and then they lease them back to you. The benefits of this transaction include the immediate migration of your vehicle fleet into this new operating method and at the end of their remaining lease period, you can switch those older vehicles for brand new ones. Many businesses enjoy the benefit from the working capital (cash) being released from those vehicles, too.
Telematics – Vehicle Telematics uses a combination of GPS and an electronic device in each vehicle to communicate with a user via web-based software. It tracks the location, status and behaviour of fleet vehicles, including speed and when the vehicle has been in use, to improve driver behaviour, increase productivity, compliance for duty of care and reduce costs.
VED - Vehicle Excise Duty, an annual tax on the ownership of road vehicles. From April 2017, VED is calculated based on the CO2 emissions of the vehicle and its value. Vehicles with higher C02 emissions pay more than those that have lower emissions. Vehicles that costing more than £40,000 also pay more. Vehicles with 0 emissions are exempt from VED.