Company cars are a popular employee benefit, particularly for those who travel often for work or have seniority within an organisation.
With the current cost of living crisis and changes in working habits due to the pandemic, employees and prospective employees are looking more closely at the additional benefits a company is able to offer, as well as salary rates. Therefore, by offering company cars, an organisation may be able to recruit better talent, making it a mutually beneficial offering.
How do company cars work?
Company cars are offered to employees by an organisation for personal and professional use.
This is sometimes offered out of necessity, for example, to employees who travel on a regular basis to meet clients or for service repairs.
Cars do not only have to be offered out of necessity, they can also be provided as a company perk, even if car travel is not an essential part of the job.
What are the benefits?
Financial – There are multiple financial benefits to offering company cars. For employees, they allow reduced spending on travel. For businesses, national insurance contributions can be reduced and there is the opportunity to claim capital allowances that reduce taxable profits.
Convenience – Owning a car can involve a lot of admin, from managing insurance to MOTs and services. If the car is owned by the company, employees are relieved of this inconvenience. For employers, company cars offer the convenience of knowing that staff have a reliable mode of transport, especially important if they are required to meet up with clients or customers.
Advertising – Company vehicles provide the perfect opportunity for advertising. Including branding on these vehicles allows exposure to a wide range of potential customers.
Pride – For many employees, being offered a company car comes with a great sense of pride which in turn leads to greater productivity at work. For a business that is planning to offer high-value vehicles, it would be wise to invest in gap insurance to help protect both employees and the organisation’s assets.
Are there any disadvantages?
Unfortunately, like most business decisions, there are two sides to offering company cars.
It goes without saying that while savings can be made, the initial investment in a company fleet can be very costly, whether the cars are bought outright or leased. Therefore, this decision will require an extensive financial assessment.
There is also the matter of sustainability to consider. Most organisations now have sustainability within their KPIs and so it may be that company cars are detrimental to this. There is always the option to offer hybrid or electric models, however, this is considerably more costly.
Companies must also consider the cost associated if a member of staff leaves. Can the car be used by someone else within the organisation or will it sit unused?
