The Company Car
A guide to the pros and cons
What is a company car?
A company car is a car that your employer provides for you to use, normally for both business and personal use.
A company car is subject to company car tax, also known as Benefit in Kind (BIK) tax. This is based on the CO2 emissions of the vehicle, the P11D (vehicle value) and your personal tax band. You can see our full guide on this here.
Why should you choose a company car?
If your company car is leased, then the finance will be in the business’ name so there's no financial risk for you personally. The BIK you'll pay is usually a fraction of the cost you have if you take out the lease personally.
With a company car, any servicing and maintenance costs and your insurance will usually be covered by your employer as well. As you don' t own the car, you won't need to worry about the vehicle value depreciating and having to sell it when you're ready for a new one.
A company car is usually updated every few years, especially if it's a lease vehicle so you'll be able to access the latest models.
Other things to consider:
As the car is provided by your employer, they're the ones who can set lease restrictions on the vehicle. These include the models you can select from, and the terms of the lease, for example the mileage allowance, maintenance level and length of contract.
If you have a company car then you'll need to pay BIK tax. You can find out more information about this in our Guide to Company Car Tax.
The BIK rates are more expensive on higher value vehicles and are based on the vehicle’s P11D value, which includes any additional options that you've added.
If fuel's included with your company car package, then you'll have to pay company fuel tax as well. We’ve put together a Guide to Company Fuel Tax to help explain this if you want a little more information on the tax before you decide if you want to accept fuel as part of your package.
If you change employment, then the car will stay with your current employer.
Your business may offer you a car allowance, which is a cash payment, rather than a company car. Take a look at our comparison of the two to help you decide which is best for you.
If you want to find out more about our great business offers then check out our best deals here or give us a call on 03302210000.