Employee benefits: Why a car?
Read more about the different car benefits to find out what would work better for your business.
Why are employee benefits important?
If you're running a business, big or small, it's important to keep your employees engaged and motivated. Businesses with a high turnover of staff often find they can improve their employee retention by offering the right benefits and perks.
There are lots of different employee benefits packages on the market - but offering your employees a car might prove to be the most rewarding. A survey published by XpertHR in 2017 found that company cars are still a popular employee benefit, with 71.3% of organisations having a company car scheme.
Why a company car?
It benefits your employees
Over 36% of UK workers still drive to work, putting a car on the top of the employee benefits list. Rewarding your employees with a company car lets them know how much you value them. You'll be helping your employees by removing the financially responsibility of owning and maintaining a car.
Remember - Your employees will need to pay benefit in kind tax which is calculated based on CO2 figures and the value of the car. You can use our benefit in kind calculator to find out how much your employee would need to pay.
It's good for your business
You can reclaim 50% of the VAT on cars leased to employees if they use their car for business and personal journeys, and 100% if the car is used for business purposes only.
With business contract hire, the car's monthly payments are usually lower and you don't need to worry about the vehicle depreciating in value. You can read more about the benefits of business contract hire here.
Top tip - Investing in charging points at your businesses premises can encourage your employees to drive electric or hybrid cars which can lead to long term savings and a more eco-friendly business model.
Remember - You need to pay Class 1A National Insurance on company cars and will have extra administration in the P46 form every quarter.
Offering your employees a cash allowance in lieu of a company car
eliminates the worry over additional taxation and administration. But,
you'll need to be careful that you're fulfilling your duty of care and that
your employees' cars are safe and fit for purpose.
If you do offer your employees a cash allowance or are looking for a voluntary car plan, Affinity Cars could be for you. It won't cost your business to join, and your employees can shop online for personal car leasing deals. You'll have complete peace of mind knowing your employees are dealing with one of the top leasing companies in the UK.
Affinity Cars is for every member of your business. Employees who aren't eligible for a company car or cash allowance can access market-leading car leasing deals. Your employee will take out a personal agreement which means we deal directly with your employee so there's no risk to your business.
There's lots to consider when choosing how to reward your employees. Our expert team can talk you through what will work for you.
Find out more about our latest launch, Affinity Cars, here.