Pros and cons of providing company cars

Is a company car scheme right for your business? Weigh up the pros and cons listed below before making a decision.


  • It is a visible reward and confers status – for both employer and employee.
  • It is recognised as an essential part of the benefits package for recruiting and retaining quality staff.
  • It is a controllable reward scheme that does not increase the wage and pension bill (although there will be National Insurance implications for employers , there are no NI implications for employees).
  • With a restricted choice, or ‘badge’ of vehicles, it can reinforce a particular image of the company.
  • It can reduce the carbon footprint of an organisation.
  • At the moment, it is generally considered the lowest cost car benefit.
  • Having a company car is very convenient for employees as it removes concerns about servicing, replacement, etc.
  • In spite of considerable tax implications, a company car still has a significant financial value for employees, which is independent of salary limitations. One in four adults has little access to the independent finance that would allow then to buy a car of a comparable calibre to their company car.


  • A more flexible system of reward and benefits can be difficult to manage.
  • There is no employee ‘hook’, so the employee can simply walk away from the benefit with no penalty.
  • Cars are motivational but, even in today’s flatter and more transparent organisations, remain an emotive benefit – specification and to an extent, badge power, are major issues for employees.
  • All vehicles must be fit for purpose – it is unlikely that an employee will thank their company for giving them a tiny ‘city car’ if they are a high-mileage driver travelling 25,000 miles a year.






























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