Are Company Cars Worth it?

There’s still something undeniably braggadocious about telling people you drive a company car.

Indeed, many businesses still use it as a key benefit to draw in top talent, particularly if the job in question requires a fair amount of driving.

But is it worthwhile to offer company cars to your employees in a world of soaring petrol prices?

Company car advantages

Financial freedom – For the employee, there are no significant financial ties with a company car. It’s the responsibility of the employer to make payments and sort out everything from general maintenance to the annual MOT. The employer will also generally cover any insurance costs and tax and might even offer a company fuel benefit.

Tax breaks – The benefit-in-kind tax rates you’ll typically pay on a company car as a percentage of its total cost can be brought down even lower if you choose to go for hybrid and electric vehicles. Indeed, BIK rates in the UK are just 2% for electric cars. You could also provide a company car as part of a “salary sacrifice scheme” to cut down on National Insurance payments.

Recruitment – For the employer, company cars are a powerful way to attract and retain top talent. It’s a great way to show your employees that you value their efforts and that you are willing to set a standard for all future employees.

Choice – Whether you’re a small startup company and you’re looking for a batch of Used Volkswagen cars in London or a top-tier legacy company looking for a fleet of brand new Teslas, there are several companies that specialise in providing fleets of vehicles. You can also choose to buy them outright or lease them.

Convenience – Access to a company car will mean a great deal of added convenience for employ-ees. Having a car ready to go at a moment’s notice with no personal worries regarding its upkeep could prove a significant benefit for many workers, particularly those with children.

Company car disadvantages

Restrictions – Some employees might prefer to use their own cars and could resent the concept of being told what they need to drive. This will depend on the line of work, of course. Note, however, that many company car leasing specialists offer a range of cars for employees to choose from.

Tax – While there are great tax breaks to be had for low-emission cars, if you’re a higher earner driving a gas guzzler then you will pay a significant BIK rate. You might also need to pay fuel ben-efit tax.

Ownership – If an employee leaves the company then they leave the car behind with it. This miti-gates much of the feeling of ownership over the car that many enjoy.

Liability – If the company car is also used as a personal car and the driver gets into an accident, the company will still be liable for the damages. So you better make sure you have decent company car insurance!