Boon Or Unnecessary Expense? A Closer Look At The Worth Of Company Cars

17 January 2020

Year-on-year, the average number of company car drivers have dropped by about 50,000, according to HMRC’s study. As employers are always looking for ways to entice employees and keep them happy, the concept of a company car is often mulled over. So in the grand scheme of things, is a company car worth it? 

Initial Investment And Subsequent Maintenance

One of the first concerns about a company car is the initial investment that’s needed. Depending on the sort of business that exists, the size and type of vehicle must be carefully considered. The average cost of a medium-sized car in the UK ranges from £21,800 to £32,000, according to NimbleFins. Then, after the initial investment, comes the annual maintenance cost which can go up to £2,300. It is crucial for management to carefully consider if the business can carry these costs.

Taxes and Tax Cuts

Beyond initial payments and maintenance, there are also taxes to consider. It can be challenging to calculate taxes at first, especially after you factor in the new BIK tax rates that will depend on the age and type of vehicle that the company car is. The fewer carbon emissions the vehicle produces, the fewer taxes there are to pay. There are more discounts and tax exemptions for electric cars and certain types of vans. So if the company chooses their vehicle right, weathering taxes is not as bad. In fact, it may even be a long-term bureaucratic benefit for the company.

Overall Employee And Company Benefit

Beyond the tax benefits, businesses must also consider what sort of benefit a company car may provide for the employees and the business itself. Employees with company cars no longer have to worry about transportation, and will be able to reach necessary destinations easily. For service companies, the company vehicle is a ready-made canvas for marketing opportunities. Large companies like Microsoft and Google still consider company cars a necessity in providing both their business and their employees with a boost in productivity and visibility.

Yes, the initial investment and subsequent maintenance costs can make most companies (big and small) baulk. However, with tax benefits, the potential for marketing opportunities, and employee satisfaction, there are a lot of positives to getting a company car. Ultimately, the worth of a company car can only be fully determined by taking a step back and seeing the long-term effect and costs.



 If you want to discuss how you can attract the best candidates to your business, get in contact with MCS Group on 028 90 235 456 or email



Add comment