Lease Car Policy and Procedure. Date Version Number Planned Review Date. Version 2. Version 3. Version 4 Addition of Appendix C

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1 Lease Car Policy and Procedure Document Code PTHB / HR 003 Date Version Number Planned Review Date June 2005 Version 1 May 2011 July 2011 September 2011 September 2014 Version 2 Version 3 Version 4 Addition of Appendix C Version 5 remove all appendix A C Feb 2015 Version 6 Feb 2018 Document Owner Approved by Date Director of Workforce & OD Document Type Executive Team 18/02/15 Policy Bwrdd Iechyd Addysgu Powys yw enw gweithredol Bwrdd Iechyd Lleol Addysgu Powys Powys Teaching Health Board is the operational name of Powys Teaching Local Health Board Issue Date: Feb 2015 Page 1 of 18 Review Date: Feb 2018

2 Item No. Contents Page No. 1 Introduction 6 2 Benefit in Kind Liabilities 7 3 Applying for a Car 7 4 The Calculation of Private Charges 10 5 Conditions of Use 12 6 Termination Charges 15 7 Additional Nominated Drivers 16 8 Return of the Vehicle 16 App No. Appendices Page No. Issue Date: Feb 2015 Page 2 of 18 Review Date: Feb 2018

3 For Reviewed &/or Updated Documents Only: Page No. Relevant Changes Date Summary of amendments/additions 10 clarity around how the scheme is calculated has been added and the and 10 The fee charged by Shared Services for administrating the scheme on our behalf has changed from 95 to 150 per annum VALIDATION FORM No policy, procedure or guidance will be accepted without completion of this section which must remain part of the policy Title: Lease Car Policy and Procedure Directorate: Workforce & OD Reviewed/Updated by: Head of Corporate HR Practice and Development EVIDENCE BASE Are there national guidelines, policies, legislation or standards relating to this subject area? If yes, please include below: National guidelines and legislation Please record additional evidence/expert opinion under the reference section DOING WELL, DOING BETTER - STANDARDS FOR HEALTH SERVICES IN WALES Please select which Health Services Standards this policy will support / link to: (Delete as appropriate) Standard 12: Environment CONSULTATION Please list the groups, specialists or individuals involved in the development & consultation process: Name Date Issue Date: Feb 2015 Page 3 of 18 Review Date: Feb 2018

4 Reviewed and amended by Claire Nicholas and Beverley Cokeley Workforce Policy Review Group Circulated for consultation to management Groups 1, 2 and 3, staff side and Intranet for wider consultation Executive Committee February 2014 February 2014 October 2014 January 2015 IMPLICATIONS Please state any training implications as a result of implementing the policy / procedure. No specific training required but staff may need assistance with process. Please state any resource implications associated with the implementation. None Please state any other implications which may arise from the implementation of this policy/procedure. N/A Issue Date: Feb 2015 Page 4 of 18 Review Date: Feb 2018

5 Equality Statement Assessment Please complete the following table to state whether the following groups will be adversely, positively, differentially affected by the policy or that the policy will have no affect at all Comments (please provide an explanation do not just tick the boxes to the left) Age Disability Gender Race X X X X Religion/ X Belief Sexual X Orientation Welsh X Language Human X Rights RISK ASSESSMENT Are there any new or additional risks arising from the implementation of this policy? No Do you believe that they are adequately controlled? N/A Are there any Information Governance issues or risks arising from the implementation of this policy? No Lease Car Policy and Procedure Issue Date: Feb 2015 Page 5 of 18 Review Date: Feb 2018

6 1 Introduction Agenda for Change Nov 2004 and Medical & Dental Terms & Conditions introduced the principle of making official vehicles available for private use in return for a private use contribution from the vehicle holder. PtHB has made a decision to review the current policies previously in place by Dyfed/Powys HA, Dyfed/Powys LHG and Powys NHS Trust; this policy replaces any previous policies in place for lease cars. The aim of the policy is to be fair and consistent to all individuals and assist PtHB in providing the day to day Service Care to the population of Powys. 1.2 PtHB, in determining the way in which these charges were to be calculated wished to abide by the following key principles: All staff could apply for a leased vehicle if they so wished (PtHB however reserves the right to refuse an application on reasonable grounds). It is important that where a lease car is considered, it is against the post, as official mileage plays a key part in the cost of the lease. The calculation of the private use charge is to be based solely on the number of business miles travelled and not where the individual travels to. There should be no incentives or penalties tied to the scheme with free access in or out of it (except for early termination charges on lease agreements). The choice of vehicle would be left to the driver, but PtHB retains the right to ensure that the lease vehicle meets the Green criteria both in emissions 165 CO2 and cc of the vehicle. PtHB s liability will be restricted to the total cost that would have been incurred had the individual used their own car and been paid travel expenses under A4C and Medical & Dental Terms and Conditions for Standard users. The scheme should be simple to understand. 1.3 The operation of the scheme is governed by the Consumer Credit Act and PtHB is licensed under the Act. 1.4 The information contained in this policy is subject to changes in legislation. Staff should be aware that a lease car is considered to be a company car and remains the property of PtHB during the period of the lease. It will therefore be subject to taxation as a benefit in kind. Please contact your tax office for further information. Issue Date: Feb 2015 Page 6 of 18 Review Date: Feb 2018

7 1.5 This policy applies to all grades of staff within PtHB including directors, board members and medical and dental officers. PLEASE NOTE for staff transferring into PtHB and bringing their lease car with them. The Agreement from the Directorate Manager MUST be received by the Lease Car Department before the vehicle can be accepted. Without this agreement in place, the vehicle CANNOT be covered by our insurance. 1.6 The individual will be responsible for supplying a full copy of his/her driving license including details of any convictions/penalty points on an annual basis. This includes full details as above on any subsequent nominated authorised drivers 2 Benefit in Kind Liabilities 2.1 Taxation The Government has introduced new legislation regarding the taxation of company cars. From 6 th of April 2002 the taxable liability of a company car will be determined by its carbon dioxide (CO2) emission. Prior to 6 th of April 2002 the taxable benefit was based on the business mileage of the vehicle. The new legislation is introduced in an effort to encourage selection of cleaner and more fuel-efficient vehicles. This information is subject to change at anytime by the Inland Revenue. The tax liability is based upon a percentage of the car s list price graduated according to the level of the car s CO2 emissions. The exact CO2, which is measured in grams per kilometre, is rounded down to the nearest 5g/km. Details of the scale charge are available from HMRC website ( 3 Applying for a Car 3.1 Think Carefully! When an individual member of staff decides that they would like to apply for a lease car they should, in the first instance satisfy themselves of the following: They have read and understood the policy and appreciate the basis on which the vehicle is being made available including how the charge is made up (see Section 4 below). Issue Date: Feb 2015 Page 7 of 18 Review Date: Feb 2018

8 3.1.2 They appreciate that the vehicle is not available for any purpose other than PtHB business and their personal social domestic and pleasure including commuting use if appropriate while they remain an employee of PtHB (i.e. Not for hire and reward, racing, pacesetting or business use other than for PtHB) The leasing company will recover not only the cost of damage over and above normal wear and tear, but will also charge an early termination fee if appropriate. All contract quotations include annual insurance, servicing and maintenance, road fund license (RFL), Relief Vehicle and breakdown recovery services They are prepared to care for the vehicle, ensuring it is regularly serviced by a manufactures approved agent and not subject it to abuse. They understand that any charges levied by the leasing company during or at the end of a contract relating to damage outside the companies fair wear and tear policy will be passed on to the driver They understand that the key determinate of the cost of a particular vehicle is the total contract mileage. You should not underestimate private mileage or overestimate business miles in order to either reduce the private contribution or to overstate the allowance due. Cars returning over contract mileage are charged for at a set rate per mile and these charges will be passed on where appropriate. This charge also applies to cars which are returned under contract for business mileage where the allowance has been calculated more favourably due to managers/employees overstating official mileage. It is important that both manager and employee agree on the realistic mileage for both official and private use before a lease car is formally considered They understand current legislation with regard to company car taxation. That is to say that the car is a benefit in kind and as such will attract Tax in each year following the submission of form P11d to HMRC. Income tax is taken by the Inland Revenue by adjustment to the individuals tax code That the lease is a 3-year commitment That the lease vehicle remains the property of PtHB and will be required to return the car should the employment end for any reason. If part way through a lease the employee can request to transfer to a new employer, provided that employer agrees to the transfer of ownership from PtHB and accepts all future liabilities to do with the lease. Issue Date: Feb 2015 Page 8 of 18 Review Date: Feb 2018

9 3.2 If the individual decides that they want to proceed with a lease car application they should collect the following information: An estimate of annual private mileage. This will include the journey to and from their normal workplace however no mileage can be claimed/paid for any journeys that involve home to base mileage (classed as Commuting under HMRC rules) which includes excess, on call/call out and overtime mileages. The make, model, engine size, fuel type (petrol/diesel/duel fuel), number of doors, paint colour and type (solid/pearlescent/metallic) and any factory fit or dealer options they wish to have quoted for up to 4 cars. A copy of the full driving license including any convictions or penalty points for each driver. 3.3 The applicant should submit this information on a Lease Car Application Form (which can be obtained from lease.cars@wales.nhs.uk) to their line manager who will be required to authorise the estimated business mileage as being correct. For reference the applicant should keep copies of the Lease Car Application Form. Managers should be aware that it is their duty to ensure that all business mileage estimates are realistic. Once the business mileage is authorised and a car ordered it cannot be varied. It is the principal determinate of the cost of the car to PtHB so it must be accurate. Where there are known factors that will affect business mileage over the three years of the contract these should be taken into account and an average annual mileage determined. 3.4 The Line Manager is responsible for submitting the authorised form including the appropriate signature of the Directorate to the Lease Car Officer in the Payroll Services Department, Lease Car Section preferably by to lease.cars@wales.nhs.uk or post to 7 th Floor, Oldway Centre, 36 Orchard Street, Swansea SA1 5AW who will obtain quotations for the selected vehicles at the stated mileage from a panel of approved leasing companies. 3.5 Once the authorised documentation has been received the Lease Car Officer will calculate the private use contribution using the formula detailed in section 4. A full quotation will be returned to the applicant together with a letter outlining the administration process, Issue Date: Feb 2015 Page 9 of 18 Review Date: Feb 2018

10 who will have 14 days from the quotation date to accept one of the quotes by completing the appropriate forms regarding information on the chosen car, signing and returning the appropriate page to the Lease Car Officer in Payroll Services, Lease Car Department as in 3.4 who will place the official order for the car. 3.6 If at any time between the acceptance of a quote and the placing of an order a change to the availability or specification of the chosen car occurs the Lease Car Officer will contact the applicant via and will require written agreement to any change in specification or cost before the order is placed. The acceptance of a quote does not bind PtHB to provide a car at the quoted specification or cost where it is unable to do so due to factors beyond its control (e.g. manufactures price increase, delivery delays or shortages of particular models). 3.7 Once the order has been placed and confirmed by the Leasing Company, the Lease Car Officer will notify the applicant/driver to arrange delivery directly with the leasing company. The employee only will be responsible for receiving the car and inspecting it, bringing any concerns to the attention of the Lease Car Officer and delivery person immediately. The employee only is required to sign the leasing companies delivery note accepting delivery, these forms should be forwarded to the Lease Car Officer as in 3.4 and held on the appropriate lease car file for the individual. 4 The Calculation of Private Use Charges 4.1 Table 1 Example pricing calculation Peugeot EHDI 115 (illustrative only) Base data Business miles 6,000 Private Miles 6,000 TOTAL 12,000 Example of Cost of Lease Car and Contribution based on above illustration:- Issue Date: Feb 2015 Page 10 of 18 Review Date: Feb 2018

11 Annual Lease Car Costs Item Cost Notes Lease Car Rental 2380 Annual Lease cost (including maintenance, excluding VAT and RFL). VAT is reclaimable on lease payments for chargeable staff cars Plus Admin Charge 150 per annum Charge to cover quotes, ordering, receipt and claims management Plus Road Fund Licence 00 Licence varies depending on Co2 emissions of vehicle Plus Insurance 385 Insurance is tendered annually for the fleet and share charged to each car Plus Class 1A NIC on Benefit in kind 315 Class 1A national insurance is charged to the employer on benefits in kind such as cars (see explanation below). In order to retain fairness with non lease car holders this necessary cost of the car must be passed on through the calculation. Plus HMRC 720 Business mileage cost Mileage Reimbursement Plus VAT Output Tax 190 The charge to the car holder is liable for VAT as a supply of Gross Cost of 4140 lease Car Less allowance I.e miles at A4C standard mileage rates 2945 Calculated Health Board contribution IE what would have been paid to the individual for business miles if they did not have a lease car (at the new A4C lower rates) this includes reimbursement for petrol/diesel. Issue Date: Feb 2015 Page 11 of 18 Review Date: Feb 2018

12 Net Cost of Lease Car i.e. annual employee contribution Monthly employee contribution 1195 Gross cost less allowance/contribution as above 1/12 th to be deducted from the employees pay per month Monthly deduction Calculation of Benefit in Kind as per Company Car Taxation Rules A List Price i.e. RRP of car including options b Benefit in kind rate set by HMRC 14% which varies depending on cars CO2 emissions A x B Benefit in kind gross 2568 C Less employee contribution (table 1) A x B minus C Benefit in kind (net) 1373 The benefit in kind is calculated annually and deducted from the individuals Tax Code by HMRC. Class 1A NIC 277 Income Tax Annual Cost, Impact on take home pay of benefit in kind 20% per annum - 40% per annum 4.2 The annual administration charge of 150 is levied against each car. In this way the scheme could be self-financing in accordance with the number of cars within the fleet. 4.3 The current rates for road fund licence, fuel reimbursement, insurance, employers national insurance, administration charge and VAT are also detailed on a quotation. These are subject to review from time to time. 4.4 Once a quote has been accepted and the vehicle ordered the monthly charge will only change due to one or more of the following: Changes in road fund licence costs due to legislation. Issue Date: Feb 2015 Page 12 of 18 Review Date: Feb 2018

13 Insurance is renewed annually and any additional costs or savings are passed on to users. Changes in VAT. Changes in class 1A national insurance rates Changes in taxation banding on CO2 emissions 5 Conditions of Use 5.1 Mileage Forms (General) The user is required to submit mileage via the e-expenses system on a monthly basis. Odometer readings will be required on the submission of the claims. Failure to submit forms on a monthly basis could lead to the withdrawal of fuel reimbursement until such time as the user has submitted the missing mileage. It may also result in all mileage being classed as private use. 5.2 Study Leave Miles As with normal travel expenses, study leave miles should be shown separately. Although fuel for approved study leave is paid at the same lease car rate as for normal business it can be recharged to the study leave budget if appropriate. If a recharge to the study leave budget is required the appropriate budget code must be entered on the expenses form. Managers should note that certification of a form including study leave miles where the change is budget code details is not entered will mean an acceptance of the costs within normal budgets. 5.3 Business Miles Normal rules for assessing business mileages apply. The only exception to this being the journey to and from the nearest manufacturers authorised agent for normal servicing which can also be included as business miles (the Expenses Officer will be responsible for assessing the reasonableness of such claims and as a general rule the distance will be taken as the lesser of that from home or work to the garage using autoroute information). 5.4 Reimbursement of Official Mileage Issue Date: Feb 2015 Page 13 of 18 Review Date: Feb 2018

14 Reimbursement of official mileage will be in accordance with current HMRC rates. 5.5 Changes in Mileages Where a user experiences a change in their business use of the car and this is due to a change in their work beyond their control, PtHB will not adjust the private use charge. However PtHB reserves the right to limit its exposure to additional cost by reducing the total contract mileage of the car. A reduction in business miles is not an excuse to increase private mileage to compensate. In any event PtHB will pass on at the end of the lease, those additional charges relating to over contract mileage caused by private usage. Please inform the lease car officer of any temporary situation which may affect business mileage e.g. maternity/adoption or long term sick Leave. Note staff in receipt of Excess Mileage or whose base is deemed their home may result in the lease incurring additional Tax charges for the individual and the Health Board (Fuel Benefit Charge). This applies to staff who become eligible for excess mileage during the period of the lease contract. Each case will be assessed on its merits however it is unlikely that staff in receipt of excess mileage will qualify for a lease car due to the tax implications. 5.6 Insurance The vehicle will be insured by PtHB for PtHB business, study leave and social/domestic and pleasure use only for as long as the user remains an employee of PtHB. Full details of the insurance policy in force will be circulated to users on renewal. This will include excess levels under the policy. Usually the policy will include a minimum policy excess which is the drivers liability and additional excesses for young, inexperienced drivers or those with previous convictions for traffic offences who are employed by PtHB. PtHB reserves the right to refuse applications from employees with a poor-driving record. On renewal any increase or decrease in premium will be passed on to users. The vehicle will not be insured for provisional licence holders. 5.7 Accidents As with any motoring accident the driver should ensure that he/she obtains full particulars (vehicle registration, make, colour, drivers name and address, driver s insurance policy number and company) from the other party/parties involved. Where possible they should also obtain the name and address of any witnesses and the name and number of any police officer who attends. At no time should they admit responsibility. Users Issue Date: Feb 2015 Page 14 of 18 Review Date: Feb 2018

15 should contact the Insurance Company as stated on the Claims handling information supplied to you by the Lease Car Team, as it is the Insurance Company who must advise you of the action to be taken. Approval to commence repairs can only be given by the Insurance Company. All damage to the vehicle must be notified to the Insurance Company immediately. 5.8 Motoring Offences On application of a lease car the individual must supply a copy of the driving licence to the Lease Car Officer and details of any motoring convictions. It is the responsibility of the driver to ensure that, after these details have been submitted, any future convictions, for which points are awarded, are notified to the Lease car officer immediately. 5.9 Fixed Penalty Offences Any fixed penalty offences relating to the lease car will be the responsibility of the named driver. Where these offences may be the responsibility of another authorised nominated driver, it will be the responsibility of the named driver to ensure that the appropriate documentation is completed correctly and returned in the official envelope supplied with the minimum of delay Travel Abroad Before travelling abroad with a lease vehicle, the employee will be required to notify the Leasing Company who will arrange details accordingly this requires min of 28 days notice. You will also be required to take out your own adequate personal travel insurance as the lease car insurance will only cover the vehicle 5.11 Wear and Tear Whilst it is acceptable that a vehicle is subject to reasonable wear and tear during its life the leasing company s interpretation of fair wear and tear is usually very closely drawn. Excluded are such things as: Glass Breakage (windows and lights) Punctures Kerbing damage to tyres and wheels Stone chipping where the paint is broken and rusting has started Scratches to paintwork and bumpers Holes left by the removal of mobile phones Issue Date: Feb 2015 Page 15 of 18 Review Date: Feb 2018

16 Stained, torn or cigarette burned upholstery Mechanical failure due to abuse or incorrect servicing Valeting of the car where proper care has not been taken. It is in the employee s interest to ensure that the above are fixed at the time they occur, or at the time the car is serviced as per BVRLA guidelines (British Vehicle Road Licence Association) The PtHB can be invoiced for damages as listed in and where it is clear that they are the result of private use, careless business use or a failure to properly care for the vehicle these charges will be passed to the user. 6 Termination Charges In making a vehicle available for private use by an individual, PtHB does so on the understanding that the user will keep the vehicle for the 3 year contract term. Under certain circumstances the vehicle may become surplus to requirements before the end of the lease and will need to be returned to the leasing company early. In such cases it is normal for leasing companies to make an early termination charge to reflect its increased costs. PtHB will recharge the individual with early termination costs if the termination is due to factors within the employee s control. Reasons for early termination and who will pay are as follows: 6.1 PtHB to bear costs in the case of: Ill health retirement. Redundancy. Early retirement for reasons of service efficiency. Transfer to duties not requiring/or reduced travelling brought about by management. Dismissal Organisational Change where the lease Car employee has been forced a change of base which would give them eligibility to excess mileage which if claimed by the employee they will incur additional Benefit In Kind in the form of Fuel Benefit Charge. 6.2 User to bear costs in the case of: Voluntary resignation of posts for any reason (including new appointment). Voluntary termination/handing back of vehicle before the end of the lease contract. Issue Date: Feb 2015 Page 16 of 18 Review Date: Feb 2018

17 (NOTE: For users who apply internally for a post not requiring travel it is the responsibility of the employee and appointing officer to negotiate arrangements surrounding an existing lease car. These should however be agreed in writing before confirmation of appointment by the Director of Workforce and OD, and copied to the Lease Car Officer.) 7 Additional Nominated Drivers The driver can nominate additional drivers who hold a full driving license to use the vehicle, where this is a requirement each named, additional driver will be expected to provide details of their full driving license and convictions to the Lease Car Officer, who will authorise the application. PtHB reserve the right to refuse any such requests. For drivers under the age of 25, special consideration will be given by the Lease Car Officer. 8 Return of the Vehicle months prior to the due return date the driver will be contacted by the Lease Car Officer to ascertain their intentions with regard to renewal or withdrawal from the scheme. 8.2 The Lease Car Officer will advise the driver of the vehicle collection at the end of the lease period. The driver must inspect the car with the collecting agent and any damage must be identified on the inspection form provided, to the satisfaction of the driver and sign for the acceptance of the inspection. Failure to do so will result in the driver being responsible for any return charges being made by the leasing company. (If you require any further information or advice please contact the Lease Car officer prior to collection date) the employee will receive clear instruction via . The milometer reading must also be entered on the collection sheet and appropriate return vehicle report form supplied by the collecting agent. This will form the basis of the assessment of the drivers/pthb s liability with regard to claims under the fair wear and tear policy of the leasing company as per the BVRLA so it is vital that the vehicle is returned in a clean and tidy condition. 8.3 If for whatever reason the employee is dismissed or the contract of employment ended the employee will be required to return the car immediately as part of PtHB property. On return of the vehicle the employee only must hand over the vehicle please ensure that identification is sought from the collecting agent before you hand over the car, documentation and keys and a signed Issue Date: Feb 2015 Page 17 of 18 Review Date: Feb 2018

18 termination document is received as a form of receipt from the collector. Issue Date: Feb 2015 Page 18 of 18 Review Date: Feb 2018