Providing a company car can bring pitfalls but also plenty of upsides.
Offering an employee vehicle for personal and business use may be a solution if the role requires a lot of driving day-to-day or maybe the person holds a particularly prominent position in the company.
Particularly with the UK in the midst of a cost-of-living crisis, with inflation rates remaining above 10% in December 2022, the use of a company car may be an attractive proposition for an employee.
For businesses, offering company cars can actually help to attract and retain employees, while saving staff and the company a lot of money in the process.
How company car schemes work
Essentially, a company car scheme is when a business will offer employees the use of a company vehicle both for business use and for private use. Around one in two cars sold are for such uses.
For some businesses, such schemes are essential to the running of their affairs because transport is such a huge necessity in their lines of work – such as attending sales and client meetings or working in building and repair work.
However, for some, the use of a company car is presented as a perk of taking the job even if there is not necessarily a requirement in the role to have the use of a company car.
How they can help and benefit workers
Company car schemes can help to reduce employer national insurance contributions and allow businesses to claim capital allowances that reduce taxable profits.
Providing company cars means you could add advertising to the vehicle and help reach more potential customers and improve brand awareness while using low CO2 emission cars can help the environment.
It helps the employee not have to worry about when the right time to replace a car is and reduces fears over things such as servicing, and there are no national insurance implications on staff.
There is also a level of prestige which comes from having a company car and depending on the brand and value of the car, let’s say a £30-£50k Alfa Romeo, it would be wise to look for anAlfa Romeo gap insurance policy for peace of mind to your employees.
Disadvantages of company car schemes
Of course, there are some negatives to consider and weigh up against the pros – not least the fact that providing a large fleet of cars for staff can quickly see the pounds add up.
You have to think too about the suitability of a vehicle for the job being undertaken, for instance, a smaller car will not necessarily go down well with employees doing thousands of miles a year.
For businesses, there are costs such as car registration, VED rates and insurance to price up as the car is owned by the company, while there is no penalty for any member of staff who opts to walk away from the benefit.
For employees too there are pitfalls, such as the fact you may need to pay company car tax depending on the scheme.
