Among the most popular perks in the modern workplace is the company car. This vehicle, owned by an employer, will allow an employee to carry out their duties without any of the stress and hassle associated with ownership.
If you’re considering offering company cars to your workers, it’s worth mulling over a few of the key advantages and disadvantages.
Pros
The most obvious upside of a company car scheme is that it will allow you to attract the best possible candidates for vacant positions. More than this, it will allow you to retain valuable staff, who might otherwise be tempted away. When workers are asked which perks they prefer, the company car often features.
A company car is also a chance to present your company in the right light to outsiders. If your executives are going to meet with clients and other important people, it will reflect well on you if they pull up in high-end vehicles.
While this might seem expensive, you can often keep costs down through a company car scheme, which sees the employer effectively buy in bulk. By leasing a car through the business, you might lessen your tax obligations, while lowering your costs in other ways. The used market might also be of interest: you can pick up used VW cars and offer them to your employees.
A company car also means greater flexibility for your workers. When they want to upgrade, they won’t have to deal with the buying and selling process. In other words, a company car makes motoring life much more convenient.
Cons
With all of those upsides mentioned, it’s worth dwelling on a few downsides.
Firstly, there’s the cost of running the car. Typically, the company will cover not just the up-front cost of the vehicle, but all of the ongoing costs, too. This means insurance, and maintenance. You’ll also end up covering the fuel for work specific travel in the vehicle (though you would have to cover fuel even if the vehicle was the employee’s own but being used for work travel).
If you haven’t factored all of these into a cost-benefit analysis, then you might end up surprised and disappointed by how much the scheme affects your bottom line.
Insurance premiums can be high too, particularly where your employees have limited no claims or previous liability for car accidents.
It’s also worth bearing in mind that if your employees have access to the vehicle for personal use too, which is often the case with company cars, this is a P11D benefit and in some cases, it might cost them as much in tax as it would to run their own car!
The P11D tax liability is lower for hybrid cars (as it is based on emissions) and is incredibly low for electric vehicles at the present time. In addition, Government grants are available at the time of writing to contribute to the cost of installing EV charging infrastructure in workplaces.
Conclusion
Company cars offer a level of convenience and class that’s difficult to replicate through other means. While ride-sharing apps like Uber offer a lot of premium options, they’re difficult to rely on, which might make them unviable for business purposes.
For smaller firms, the investment in a company car scheme might be a considerable one – but the benefits can often outweigh the drawbacks, in the long term. Your company relies on the talent it can attract, and the right company car can often make all the difference when it comes to drawing in and retaining the personnel who’ll make the company thrive.
