Business Brainstorming: The Pros and Cons of Providing a Company Car for Your Workers

It is not always a straightforward decision when it comes to the issue of providing a company car for some of your workers, as there are definite pros and cons that can influence what you do.

There are numerous things to consider such as employee safety and as Livingston personal injury lawyer injuryclaimnyclaw.com sees often, accidents and injuries can occur behind the wheel of a company car.

Aside from trying to keep your workers safe, there are also some practical considerations to take into account, such as the tax implications of a running a company vehicle.

Valuable perk for workers

Providing a company car is often viewed positively as a valuable benefit for an employee and it can be viewed as a status symbol as well as reliable means of transportation that allows workers to get around more efficiently, as well potentially more stylishly too.

Giving up some of their salary

A company car is generally viewed as a taxable benefit and it is perfectly feasible that you might look to provide a vehicle as part of a recognized salary sacrifice scheme.
A salary sacrifice scheme is a compensation arrangement between your company and the employee who is going to be provided with the car.
It could have the effect of reducing your insurance and employees income tax payments. While these salary sacrifice arrangements are perfectly legitimate schemes, they can turn out to be more expensive for your employee than if they funded their own vehicle privately, so you would need to do the math and see whether it works for both parties before committing to a deal.

Keeping written mileage details

You will need to be aware that unsubstantiated expenses are not deductible.

The rules work on the basis that any business use of a vehicle needs to be substantiated, before you will be allowed to deduct any business expenses associated with the car. If the car is being used by a number of different employees or by one individual, each person who drives a company car will need to keep written mileage records that illustrate the length and purpose of each business trip.

These rules may not apply of the vehicle in question is unlikely to be used extensively for personal use, so a delivery or repair truck with single seating, wouldn’t need to be substantiated.

You will have to decide if these rules would apply and whether the paperwork would be be an issue on a regular basis.

Other considerations

As well as considering the tax implications of a company car from both the employer and employee point of view, you should also budget for repairs and annual maintenance costs, as well as the cost of insuring the vehicle for business use.

On the plus side, the perk of having a company car is still a good motivation for some workers and can help you to attract and retain staff.

The perceived value of a company vehicle will almost certainly revolve around your company’s circumstances and whether the pros outweigh the cons.

Kian Porter’s working life revolves around cars. He has had numerous car related jobs over the years, starting off at a mechanic, then salesman, then fleet manager, and as if that’s not enough on his weekends he attends as many track days as he can!