A company car may be a perk that helps recruit and retain great staff. For some, having a corporation vehicle may be a vital part of their role.
However, it can be complicated to provide an employee with a car. It also raises a variety of questions from the worker.
Cheap accountants in London will explain the method and what you would like to stay in mind for your company car policy to work effectively.
Company car vs car allowance
The first thing we'd like to clarify is that there’s a difference between providing an employee with a car and therefore the supporting allowance.
If you provide an employee with a vehicle, then you’re liable for the repairs, MOTs, and services thereto.
You’ll even be responsible for insurance, driving costs, and re-selling the car should the worker haven't any further use of it.
If you provide a car allowance to an employee, then you’re providing them with the funds to get their car.
As a result, the vehicle doesn’t belong to the corporate and therefore the responsibility of maintenance falls to the worker.
The tax implications are also considered when applying for the company vehicle allowance. Typically, corporate car payments are much higher than the allowance of a car.
It’s your choice what approach will best suit your business needs.
What is a car allowance?
It’s a sum of cash you increase the employee’s annual salary for the aim of allowing them to shop for or lease a vehicle.
The staffer will need to source and buy the vehicle by themselves. They’re also liable for maintaining and insuring the car, also as monitoring expenses.
However, it's worth noting that you simply can still give mileage allowance additionally to car allowance if you would like.
How does car allowance work?
Firstly, you would like to make a decision about what proportion you’re willing to supply to the worker so as for them to get a vehicle.
A recent survey found that the typical car allowance within the UK is as follows:
£10,300 for heads of enterprises (directors & c-suite individuals).
£8,200 for senior managers.
£6,500 for middle managers.
£5,200 for sales representatives.
£4,600 for professionals.
Then, you would like to incorporate a car allowance clause within the employee’s contract. this could state what proportion allowance you’re providing.
Reiterate that the worker is liable for maintenance, insurance, etc. Once the staffer buys (or leases) a vehicle, they’ll be ready to claim a mileage allowance. this could cover the value of fuel also as wear and tear.
Comments