Company Cars vs a Car Allowance

In many businesses, it is important that employees have access to a vehicle that they can use. A company car can be a valuable asset for an organisation, but it is also a major investment. This is why it is helpful to know exactly what a company car is, along with the pros and cons and what a car allowance is. Keep reading for all you need to know.

What is a company car?

A company car is a vehicle that an employer provides to an employee for business and personal use. The arrangement usually covers the cost of the vehicle, fuel, insurance, maintenance, and any other associated costs. It is a valuable perk for an employee and can play a key role in recruitment and retaining talent.

Pros of a company car

Company cars are incredibly valuable for employees as they eliminate the need to buy a personal car (a major expense), and all costs are covered by the employer. From an employer standpoint, it is helpful knowing that staff has a vehicle that they can use for business purposes, such as travelling to client meetings. A company car can also help maintain a professional image – you can choose a sleek, stylish vehicle, which is likely more professional than a car that an employee uses outside of work.

Cons of a company car

For employees, they do not get a choice as to what vehicle they drive, which could mean the car is not suitable for their lifestyle. Additionally, the taxation can result in higher tax liabilities for workers. There may also be limitations as to how the vehicle can be used, and it might cost more to insure than your own personal car. For employers, a company car can be a major ongoing expense – this means that it should only be considered if driving is a regular part of the job.

What is a car allowance as an alternative?

An alternative worth considering is a car allowance. As the name implies, this involves employers providing employees with a fixed amount of money to buy and maintain an automobile. With this method, employees get to choose their own vehicle, meaning that they can choose a car that best fits their needs as opposed to the company’s. If looking to buy your own car with an allowance and are based near Leeds, try looking at used car dealers in Leeds where you can get more for your money.

There is a lot to consider when it comes to company cars. Company cars can be a benefit for both employees and employees and a major perk that can keep workers happy. They will also be a major financial investment for businesses, so weighing up options and determining whether a company car or a car allowance is the best option for your business and employees is important.