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A company car is when a business provides an employee with a vehicle for both business and personal use. This might be because they travel a lot as part of their day-to-day work or because they hold a significant role in the company. Company cars can be an attractive prospect for many potential employees, particularly with the rising cost of living. In this article, we’ll take a look at how company car schemes work, what the main benefits are and whether they can be used to successfully attract and retain employees.

How company car schemes work

In the past, a business offering company cars would usually buy a fleet of cars in bulk and hand the keys over to any employee that needed one. Today, however, employers can make use of car lease deals, meaning their employees are often able to choose their own car from a selection of pre-approved vehicles.

The employer pays for the car purchase (or hire) and also typically takes responsibility for car insurance, vehicle tax, and MOTs as well as servicing and maintenance, leaving the employee to only add fuel. Some company car schemes even include an annual fuel allowance.

It’s important to note that a company car is considered a ‘benefit’, which means an employee has to pay company car tax and if fuel is included in the arrangement, they’ll need to pay tax on this too.

How can they benefit employees?

A company car scheme has many potential benefits for employees.


Even with the added tax to pay, a company car can still often work out far cheaper than if an employee were to buy or lease a car privately. Not only are they not tied into long-term repayments for car loans and interest but employees also won’t have the unexpected costs associated with running a car such as hefty repair bills.


Not only does it allow employees to drive a higher-quality vehicle at a fraction of the cost but with servicing and maintenance taken care of, employees are less likely to experience difficulties, such as their car breaking down on the way to an important meeting, for example. They also don’t need to worry about public transport, missed connections or late trains. A company car means employees have a more reliable form of transport to get to work and do their job efficiently.


Having a vehicle that’s provided by their employer can take a great weight off a person’s mind, meaning they’re less stressed about transport-related issues.

Are company cars an effective way to attract and retain employees?

Company cars don’t just benefit employees. They’re also good for business too.

As well as ensuring your staff can get to work safely and on time, you’re also showing employees that they’re valued and appreciated. The offer of a company car can give your current employees a morale boost and can attract potential new employees who are considering the benefits of joining your company. Furthermore, employees who aren’t worried about late buses, faulty cars or personal finances are going to arrive at work feeling happier, less stressed and better able to focus.

If you’re looking to attract and retain employees, additional perks such as a company car can sway people into applying for a job with or staying at your company. So although providing company cars is a financial expense for a business, the wider long-term benefits of doing so can outweigh the upfront costs.

The post Do Company Cars Attract and Retain More Employees? appeared first on HR News.