- Is the company car still a perk?
- We explain the advantages of taking the cash option
- Which option makes most financial sense for you?
Company cars have been seen as a perk for many years now. But recently, the debate has intensified with more and more people increasingly asking – is it really a perk?
Or is having the option to take the cash actually better?
In this article we will be looking at both sides of the coin - when a company car makes sense and when it might be better to take the cash.
Taking the Company Car
First and foremost, if you have a job need for a company car, then a cash alternative may not be an option for you. Taking a company car may be mandatory because of the amount of miles you travel.
From your company’s point of view, using your own car for work-related travel does not only cost the company more if you travel a lot of miles because of the higher pence per mile rate, but there is also more risk involved. It is difficult for the company to get enough access to - or control over - the car you drive. This makes it difficult to make sure it is well maintained and safe or if it is insured properly. Thus, it could leave the firm open to prosecution under the Corporate Manslaughter Act.
Your company may limit your choice to a few manufacturers depending on the deals they have in place and they may also restrict the cars available due to the amount of CO2 emissions they produce or the availability of technology.
- You can plan your income - no unexpected bills, just a set fee every month
- A new car every three or four years
- Other costs like maintenance and insurance are covered for you
- Newer cars, in most cases, are more economical and will cost you less in fuel
The Cash Option
If you already have a car or two or even three, you should ask yourself, do I actually need a company car?
If you are struggling to keep up with finances, sometimes the cash provides a welcome relief, especially if you live close by and are not required to travel a lot with your work. Although getting a car could be good perk to the job, it may not be as useful as the cash sum.
If the company does offer you cash, be aware that the monthly sum will be added to your salary and will be subject to tax.
If you plan to use your own car to travel for work, you should check your 'driving at work' handbook because your company may have some restrictions in place. Some companies may also have an age limit or CO2 cap on your own car if you wish to travel for business.
However, you'll no longer have to pay company car tax, and if you're using your own car for work, you can charge your employer a mileage fee to cover both fuel and the cost of maintenance. The official AMAP rate set by the government is 45p per mile up to 10,000 miles a year.
- You have the freedom to buy any car you want
- Cash sum in your bank may help ease financial burdens
- Freedom to choose the car you want
- You keep the car as an asset and sell on when you're finished with it
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