When should a business consider a company car?

Company cars have long been considered as incredibly desirable perks and smart business decisions for companies that want to attract top talent without upping pay packets significantly. These are company-owned (or leased) vehicles offered to employees that need to travel extensively as part of their jobs and were traditionally bought in bulk.

Today, however, it’s customary for employers to offer their employees a choice from a list of cars. So, whether they want to drive a used Audi or a brand new Ford Fiesta, the choice is up to them and most employees see that as a bonus.

For employers, however, it’s not a decision to take lightly as there are just as many drawbacks to setting up a company car scheme as there are benefits. To that end, here is a balanced look at the solution that should help you decide whether it’s the best fit for your business.

The benefits of company cars

• Because the car is leased through the business, there are no financial ties for the employee.
• There is an obvious recruitment incentive for employees when a company car is part of the package. This mean you’re more likely to attract a higher standard of employee and it could even be used to hold on to existing employees.
• If you choose to go with electric or hybrid company cars then you will pay exceptionally low benefit-in-kind tax rates. Indeed, for zero-emission cars the BIK rate is just 2%.
• If you choose to lease your company cars, there is no worry about depreciation costs.

The cons of company cars

• All financial responsibilities regarding the car fall on the business. This means ensuring monthly payments are made, taking care of maintenance and even sorting out the annual MOT.
• Some employees might feel restricted by the selection of company cars and some might simply prefer to use their own cars.
• If employees use their company cars for personal use and get into an accident while they are using their cars outside of work, you will still be liable for those accidents.
• You might be expected to include a fuel allowance as part of the package and some employees can (and will) take advantage of it.

The best company cars

The best company cars for your business are going to depend on your business, the kind of work you do and the kind of people you employ. Generally speaking, however, you’re going to want to look for cars that are practical, economical and reliable. The car is, after all, going to act as a reflection of your business.

BMW and Mercedes are popular company cars because the names speak of luxury but if your employees are not going to be driving to meet prospective clients, you might consider something more practical like a VW Golf. We’d recommend shopping around and doing some research because there is no such thing as a perfect company car but there is a perfect company car FOR YOU.