One of the central tenets of business is that you have to go out of your way to attract the brightest and the best talent for your company. To do this, you have to provide incentives; a great place to work, a decent salary, and — more and more frequently — a nice additional benefits package.
One of the major benefits that many employees look for is a company car. Company cars are wonderfully simple for the employee; they receive a vehicle that is maintained and serviced for them with relatively little cost, and you the employer benefit from being able to offer such a perk.
If you’re considering going down the company car route and offering this as a benefit to your workforce, this might be the right choice for you– but you need to keep a few important things in mind.
The Potential For Higher Bills
When you are thinking about issuing company cars to your employees, it’s essential to remember that you have to take into account the potential cost of bills.
First and foremost, repair bills should be considered. Cars are far more detailed now than they have ever been. No longer is it just a tin box attached to a piston engine; cars contain specific, niche components that can experience issues if not maintained properly. Linear position sensors are found everywhere and luxury touches, such as heated seats, mean cars are more complex than they have ever been. The more complex a car is, the more moving parts there are to go wrong.
While most of these issues will be dealt with by manufacturer warranties and insurance, your company is going to have to pay for these schemes. If a car proves to be particularly problematic — or is driven by an erratic driver — then you could find your cost mounts as your premiums rise to compensate for such problems.
Furthermore, if you lease cars rather than purchase them outright, you also run risks of employees driving further than their mileage allowance. You may be liable for a penalty charge if this occurs.
Acknowledging the potential for higher bills is essential for budgeting correctly when considering a company car scheme; don’t just trust such a scheme will only cost you the initial quoted amount.
Tax Can Be Taxing
If you do go ahead with a company car scheme, you will need to remind your employees of the impact it can have on their taxes.
Essentially, the IRS considers company cars to be a benefit of employment, and therefore cars are taxed as part of their salary. Many employees don’t realize this initially, and may feel disinclined to accept a car when they learn of it. Before you go ahead and institute a company car policy, it’s sensible to ask around your business and ensure that there is enough interest to make the scheme viable.
We live in a world where businesses are expected to be eco-friendly, especially by the younger generations. If you offer a company car scheme, then there is a chance this will not be seen as a benefit by some members of staff. In fact, it could even be perceived as outright damaging. It is worth offering alternative perks, such as free bus or train passes, for members of staff who — for ideological reasons — do not want a company car.
When you have read through the above, you can be sure you’re able to make a decision about company car schemes and how they might work for your business.