July 2021

Company cars are one of the most sought-after work-place benefits for an employee. That shiny new car on the driveway is a big draw for staff, not only for recruiting potential employees but also for retaining the staff you already have. So, what is a company car, and what are the benefits of providing them to your staff?

A company car is a vehicle purchased and funded by employers for their employees to use as a benefit, otherwise known as "benefit in kind." Broadly speaking, it is defined as a "company car" if the driver can take it home and use it as a mode of private transport. Sometimes, employers even cover other expenses associated with a company car, such as the car's fuel. This provides an additional benefit for staff in exchange for extra tax paid out of their wages. Let's look at the top benefits of providing cars for your team.

Company Cars - A Valuable Incentive​

Providing a car for your staff allows them to be less dependent on public transport. This hopefully ensures that they can get to work punctually and having had a less stressful journey. Public transport is not cheap to use every day, and some would say that trains and buses aren't all that reliable, so company cars could prove to be a far preferable option! Also, if they own another car in the family, this second car can be spared to be used by the employee's partner or children. This allows the family greater flexibility, as well as the luxury of running one additional car where they might otherwise not have been able to.

Employee Retention

When you're looking to attract the best employees to your company, and you want to keep your best people by making them feel rewarded and valued, a company car is an excellent way of showing you appreciate their hard work. Providing a vehicle that you maintain and insure at the company's expense can take a large weight off your employee's mind, helping them be happier at work and less worried about their personal finances. Or if you choose not to provide a fully funded vehicle, you can always arrange access to preferential corporate lease schemes, or access to a salary sacrifice scheme.


Having company cars on the fleet can be an essential part of your company's brand image. The right makes of car, in the right colour and with the right livery can make a difference to the way your company appears to those you do business with. For example, if your business markets itself as particularly ethical or environmentally conscious, a fleet of electric or hybrid cars speaks volumes for your company's genuine efforts to reduce its environmental impact. Wrapping or sign-writing your fleet to match your brand can be a valuable advertising or marketing tool, help your business stand out amongst its competitors and help your employees feel like they are an integral part of the brand. A memorable website or phone number displayed on your fleet could generate more business for you.

Financial Benefits

While it may initially seem that providing and running a fleet of cars is an unwieldy expense for your business, there are a number of benefits to doing so. For example, if you provide cars to your staff on a salary sacrifice basis, where they pay towards it out of their salary, you can make significant savings on National Insurance (NI) contributions. Not only this, but your employee can reduce their own NI and income tax liability through diverting some of their salary to pay for their car, which could act as a strong incentive to them. There are also a number of ways to manage your vehicles. You can either buy them outright and keep control of servicing and replacement timescales or operate them on a leasing scheme, so they are maintained and replaced by the leasing company for a fixed cost.

Any Pitfalls?

Providing a fully funded company car is a generous benefit for your employees, but it doesn't come for free. Your staff will need to pay Benefit in Kind (BIK) tax based on a combination of the Carbon Dioxide (CO2) emissions of the car, whether it is petrol, diesel, hybrid or electric, and its list price. There are extra costs if you provide a fuel allowance for private use. Visit  Gov.UK  for more information.

Any Alternatives?

In addition to some of the ideas above, you can reduce costs all round by providing pool cars for business use only, or a van which can only be used for commuting and business use, paying a mileage allowance for your employee to use their own car, or covering their maintenance costs.

So, should you provide company cars? Well, it's entirely up to you, and how much you love your employees! If you'd like to find out more, we have an excellent stock of nearly-new, perfect cars here at Thame Cars.

Business car finance options can be discussed by our sales team – contact them on 01844393455 or you can view a selection of our latest vehicles and their finance options here.