Despite the complications surrounding company cars, the number of businesses that are providing cars to their staff for business purposes is still high. It’s one of the most significant benefits that a company can offer an individual, and for most people, receiving a company car as a perk shows them that they have arrived. Not only are they suitable for business movement, offering a company car allows your staff to access the workplace, travel between sites and even ensure that they attend client meetings on time every time. Company cars can offer serious value to your staff, and yet, it’s not always a good thing to offer.
Cars, in general, cost a lot of money. If your business is a small one, offering company cars may not be the most economical decision! Even large companies can struggle with the costs of a new car. It’s not just the cost of the vehicle, it’s the taxes, insurance, company car accident lawyer for cases that go wrong – it all adds up. There are many perks, of course, but the cost overshadows most of those perks for business leaders. Before you go ahead and start choosing company cars for your employees, let’s take a look at the pros and cons of providing company cars for your employees.
Pro: A Car Is A Valuable Benefit For Staff
Having access to a company car provides value for your employees – especially those with children to ferry around. They may have access to a car at home but if that car is shared, then a company car can ease the pressure of trying to get from A to B. A company car would give your staff far more flexibility and the chance to reach the workplace while also having the chance to use it for personal reasons, too. Lastly, a company car stops your staff from relying on public transportation, which often runs late and cannot be relied on. By offering certain levels of staff a company car, you are offering a huge bonus!
Pro: Salary Sacrifice Schemes Can Include A Car
Many companies offer a Salary Sacrifice Scheme that reduces the tax obligations of your staff and limits how much you have to pay in tax, too. Providing your staff with a car can be good for you and for them in the sense that they can offset the costs incurred with the car as part of the scheme. Of course, cars often have additional expenses involved for your staff, and it’s important to acknowledge this if you offer company cars in your business.
Pro: Transportation Is No Longer A Problem
Your business location may not be a central one, and if this is the case, you need your staff to be able to get to you on time every day. Businesses out of the way of public transport can be difficult to get to, but with a company car, you are making it much easier for your staff to get to and from your business. This isn’t necessarily the reason central businesses offer company cars but being able to access a second car is a bonus for company employees who need to split their journey with two vehicles.
Now that we’ve explored the pros of giving your staff a company car, let’s move onto the downsides that you don’t often hear about.
Con: Extra Taxes
Offering a company car for your employees provides them with huge benefits, but there are downsides, too. One of the biggest is the taxes that can be associated with offering company cars. Employees using cars for business purposes need to pay additional tax based on the value of the car and the emissions it produces. It can mean that this is not an economical option for certain staff members, but if you are only offering company cars to the high earners, this may not be as big a problem.
Con: Extra Expenses
Often, expenses for company vehicles are not necessary. They’re a luxury, sure, but they’re not a must for many staff who are offered a car as a bonus. Companies that offer cars to staff will find that this can be very expensive and costs can add up. When you’re buying more than ten cars for your workforce, you can find that this ends up being a very expensive investment – even if it is a lucrative bonus! If your business is close to other public transport options, or your staff already have their own cars, then it could be an extra expense for you that you don’t need to pay out for.
Con: Cars Are High Maintenance
Contrary to popular belief, cars are not a one-off expense. When driven throughout the year, company cars clock up a lot of mileage and will need servicing, repairs and maintenance. Not only this, the cost of insuring a fleet of vehicles does add up. When there are added complications of accidents, the cost of company cars adds up. You should also consider that company cars need to be replaced over time, and that’s another expense to consider.
Should You Provide A Company Car?
There are certain situations where a car can offer significant benefits to staff. Your company office may be remote, which offers freedom and flexibility to those who need to get to you from afar. A company car can also be a bonus for your staff in the same way an end of year bonus can be. If you want to save money, try to only offer company cars to those who are higher up in the business. The few management that you have in your company will benefit from the perks of having a company car. It shows that you value them in your business and the value of having a company car will depend on the circumstances of your business. Providing excellent benefits to your staff, a company car system can be an excellent idea. If you feel that offering a company car will benefit your staff, go for it!