Being able to provide your staff the luxury of a company car has many benefits such as being able to rely on availability of your team, advertising, and easy site visits when required. However, having company cars isn’t as cut and dry as it may seem, and there are things that you should be aware of before deciding to invest.
Trust your employees
Of course you trust your team, but to what extent? If you’re handing over a company car for them to use to perform their job to the highest standard, you’re still liable for the safety of the car. If your intent is for their car to be used for business purposes only, you’ll need to be able to wholly trust your employees to do so, especially when it comes to reclaiming VAT (see below).
Insurance fees are also your responsibility
While you may not be driving the vehicle yourself, you’re still responsible for the insurance of the car(s) you own. Protect your car with car insurance that’s specially designed for business owners and company cars. That way, if an accident does occur, yourself, your employee, and the car is covered.
Lease, finance or purchase?
You may be wondering how to go about having company cars. Do you opt for leasing, finance, or outright purchase? We’re amidst a pandemic and many businesses have had to cut costs to keep things afloat. Put every aspect into consideration before making your decision so that if push does come to shove, you’re able to save yourself as much money as possible. Also, think of the benefits that come with each option. For example, having a vehicle on finance means you can slowly pay for a car that’ll be yours eventually, whereas with leasing you’ll have to return it at the end of the lease.
As a business owner, you’ll be able to claim back the VAT paid on company cars if they’re used for business purposes only. You’ll need to prove that it’s used solely for the business. It’s also worth noting that driving to and from work to home is classed as an ordinary commute, and will prevent you from being able to reclaim the VAT you’ve paid.
Mileage allowances & overtime
You may be providing your staff with a company car to go on long haul business trips, and if this is the case you will need to think of mileage allowances and any overtime your staff will be doing. For example, if they’re required to meet with a potential client for the business that’s 200 miles away and outside of their working hours, you’ll have to compensate them for their time and part of the fuel costs.
So, having company vehicles depends on what you do as a company.
If you find you need to give your business a distribution service, get a company car. If you want your staff to be able to get to customer worksites or large meetings safely and easily but your funds aren’t high, then sit down and write down the advantages and disadvantages.