War in the Boardroom: Reducing the Politics and Burden of the Company Car

The company car burden is bringing a battle in many organisations across the UK. It’s a battle between employee and employer. The ammunition? It’s being happily supplied by the government and HMRC on both sides. Welcome to the company car warzone, where both sides can be completely unappreciative of the perspective of the other. The rules of engagement change with every budget.

Since the ’70s, company cars have been a stalwart of the employers’ benefits package. Furthermore, since the introduction of company car tax, they have become increasingly political and emotive in equal measure. Let’s draw up the battle lines; the adversaries have something in common, both want and indeed need a car to conduct day to day business. The employee needs to get from a to b to allow the employer to succeed. In this joint aim, there is at least unison. But the way to get there is fraught with friction.

On one side you have the employer.

The employer sees company cars as an ever-increasing expense, not just financial, but sheer time. For many, the company fleet can be second only to payroll. When a car is provided for the employee at the employer’s cost, the employee should express more gratitude.

Across the battle area, you have the employee. It’s not that the employee wouldn’t like to have a “free” car, it’s that there really is no such thing. The employee knows that a company car, whilst being low admin, can come with a significant tax bill. Their employer may not be charging them for the car, but HMRC certainly is, and the amount is no longer incidental. Yes, it’s nowhere near the cost of providing the same car yourself. You may, however, have little or no choice in the car you can have. From this, the driver can argue they feel it unfair paying (HMRC) for a car they don’t want.

Ultimately, this leads to neglect of the car, like a toddler with a toy they don’t want. This “collateral damage”, like all war casualties, has costs. These costs are in turn incurred by the employer when the car is returned after 3-4 years. Costs run-up, especially when a newer version is provided with an even higher tax bill, which brings additional complaints. Of course, many HR managers would love a company car. But having to fork out the full cost themselves for a personal car, they think employees should just be grateful. The battle lines are set and both sides are dug in hard.

So, how can you keep the peace and stop the costs and politics of this conflict spiralling out of control?

Well, both sides have things in common. Both want the company to succeed and both are happy to incur some cost to achieve this. However, neither want politics nor to have something imposed upon them. The problem is that companies priorities are varied, as are employees demands. Some employees have a passion to feel thrown back in their seat. Others need 7-seats to position themselves as far away from their “pride and joy” hurling toys at their head. Some really don’t care at all and want the simplest option, but perhaps to bolster their salary.

We work with a number of companies facing this exact predicament. We keep the peace in a simple way. The employer can set a policy including monthly car spend, doors, brands, but keeping it realistic and flexible. The employee can then take this as a cash allowance, giving that up for the car of their dreams. If you need a driver guard to shield from a flying buzz lightyear, it can be included; as can towbars, dog guards, and pretty much anything else. What’s even better, if Buzz misses his target and smashes through the windscreen, it’s not the employer’s problem!

The employee can trade up to a Tesla and save tax and NI on the difference.

Or, do the opposite, trade down for a Toyota Aygo, subject to employer rules, and pocket the extra cash. After all, happy employees stay loyal and are more productive. You know what? HR is happy too!

We wouldn’t like to do a Donald Trump and claim we deserve a Nobel peace prize, but we do think we have a great way of fixing an employer’s costs, reducing their admin and making drivers happy. Certainly bringing more happiness to your workplace. Better still, we can extend the scheme to those not eligible for company cars, given they meet the cost themselves.

Call in the peacekeepers today, and let’s bring harmony to your workplace! Ease the burden of the company car.

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