If your firm's fleet manager is willing to give you a company car, you'd be a fool to refuse – or would you? Well, not in every case.
You see, while there are plenty of benefits to taking up the offer of a fleet car, in some circumstances, opting for the cash alternative is the more sensible choice.
If you're facing the "company car or cash alternative" dilemma, we can help. Here, we'll set out the pros and cons of each option to help you decide the best route for you.
And once you've decided that, we can point you in the right direction for advice on picking the best car model in either case.
Read on to find out whether a company car or cold hard cash is the best option for you.
It’s the easy option right from the start, because you’ll have a specific selection of vehicles to choose from – as set out in your firm's company cars list. That saves you drawing up a shortlist of potential models then researching them all.
You won’t have to go through all the rigmarole of placing the order for your new car, getting a good price for your trade-in then potentially waiting months for delivery.
Plus, when you do start to run your new fleet car, all the housekeeping, such as servicing, repairs, insurance and breakdown cover, will be taken care of.
You’ll also have a new car every three or four years.
If you choose to take the cash option then use the money to buy your own car, you’ll end up with an asset that you can sell whenever you want – you won’t be stuck with the same car for three or four years.
Better still, the new-car market is your oyster, so you’ll have a far wider range of cars to choose from than if you’d stuck with the options listed by your employer. For example, some companies will not allow models such as coupés, convertibles on the fleet-car choice lists.
If you go for the cash allowance, it will be a similar amount to what your company would have paid to lease a fleet car (minus personal income tax).
The cash you'll be offered instead of a company car will be roughly what your employer would have paid to lease the car, possibly with a few caveats depending on their calculation method.
If you want to know exactly how much money is on the table, ask your fleet manager, HR department or payroll staff.
Bear in mind that the car allowance will be added to your annual salary, so it will be subject to your rate of personal income tax. That means you'll have less to spend on a private car than the value of the company car lease you would have enjoyed.
