June 13, 2024
Investing in a Company Car for your Business
Business

Investing in a Company Car for your Business

A company car is among the most desirable perks that a business can offer. If you’re running a business, and looking to attract the talent that will make a difference to your performance, then offering a company car might be advisable. Similarly, if you’re looking for a job, you might look for one that offers a company car.

Investing in a Company Car for your Business

Here, let’s take a look at the practice of offering a company car, and consider some of the upsides and downsides.

The Pros of a Company Car

The pros of a company car

First, let’s look at the benefits of driving a company car.

To begin with, a company car might offer better value than one bought by an individual. Companies can purchase in bulk, and therefore have the advantage of leverage when it comes to negotiating prices. Plus, there are great options on the used market with luxury cars including a used BMW 3 series, for example, in excellent condition.

Secondly, the company might be able to choose a vehicle that reflects well on the business. This way, you can be sure that your executives are showing up to important business meetings in blue, black or grey luxury vehicles.

We might also consider the potential for marketing through vehicle liveries. This is especially worthwhile when it comes to vans, which can act as mobile billboards.

The Cons of a Company Car

The cons of a company car

There are a few downsides to consider, too – from the perspective of both the company and the employee.

First, investing in a company car means planning in advance. You’ll need to have the car in place before you offer it to prospective recruits. After all, a vehicle is a fixed asset, and so presents challenges which aren’t present if you’re simply offering the equivalent value of the car in wages.

This is a challenge that can be mitigated through the right planning, preparation and research. Make sure that your cars are sitting on the driveways of your employees, rather than in storage elsewhere, and you’ll minimise your costs.

We should also think about the tax credit imposed by a company car. This will depend on whether it meets the Real Driving Emissions 2 (or RDE2, or Euro 6d) standard. You can have this done automatically, or work it out yourself using the sheet called P11D.

You’ll have an easier time calculating your tax obligations if you’re using commercial payroll software, which will be able to quickly produce the necessary figures. This way, you can plan for a range of scenarios, and choose the most cost-effective path forward.

Generally speaking, your fleet will be more tax-efficient if it’s low-emission. You might even consider going fully electric car – especially if you can offer charging facilities on your premises.

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