A NEW company car tax regime will lead to alterations in the composition of company vehicle fleets, a survey reveals.

The Institute of Directors and chartered accountants and business advisers HLB Kidsons found that nearly half of the companies surveyed expect to take emissions and engine size into account when the changes are brought in from April 6, 2002.

Nearly one in five northern businesses expected to reduce the size of their fleets -- often with employees being offered a cash alternative and/or being asked to provide their own vehicle for company use.

Richard Baron, deputy head of the policy unit at the Institute of Directors, said: "The survey has highlighted that the Government's policies seem to be working, especially among larger companies, with a swing away from company cars and changes in fleet compositions.

"The Government's aim was the discourage the use of perks and unnecessarily large cars but it should take note of the fact that 70 per cent of company cars are considered to be necessary for business use, and not just perks."

The survey highlights that companies in the North will be forced to review the benefits that they offer to employees:

Nearly 32 per cent say that they will offer a cash alternative to cars.

Nearly 33 per cent intend to revise the benefits basket offered to employees.

Many say they will change or review their policy on private fuel.

Eighteen per cent say they plan to remove cars and 18 per cent intend to remove fuel from their employees' benefits package.

Mr Rob Thompson, senior tax manager in HLB Kidsons' Motor Group, said:

"The implications are that many companies who want to leave their key employees in a breakeven situation or better will have to compensate high mileage drivers either with extra pay or benefits.

"Alternatively, they will require extra funding to maintain their current car fleet."