Company car schemes are a great way to reward your workforce and improve employee retention, but you need to ensure the costs of the scheme are viable. Controlling the costs of a company car scheme can be difficult, as certain factors such as the value of cars and the price of oil can have a knock-on effect of the entire overheads. We’ve put together a few top tips on controlling these associated costs.
Identify areas for potential savings
The first step of controlling the costs of a scheme is fully understanding the full amount you are paying. Each organisation will have a different set of costs depending on the number of employees eligible for a vehicle and the cars chosen, business miles driven etc. Employers need to identify and categorise these ongoing costs, in order to find areas and opportunities where savings could be made.
When you know how much you spend on each element of the car scheme, you can consider alternatives which would bring each particular cost down. For example, you could consider offering the scheme to fewer employees or limiting the models of vehicles to a low-cost band. You can also research different suppliers and see if switching could save you money in the long run.
If you currently offer a traditional company car scheme or fleet management service, it may also be cost effective to switch to a salary sacrifice scheme. While this needs to be carefully worked out for each business, most employers find a salary sacrifice car scheme is completely cost neutral. You can still offer employees the benefit of a vehicle, but instead of incurring all the costs employees sacrifice part of their salary to pay for the new vehicle. In addition, this saves both the employer and employee tax and NI payments.
Cancel Full Expenses
Whatever type of scheme you run, you don’t need to be liable for all your staff’s expenses, such as mileage. Control your costs by cancelling fully-expensed fuel to drivers, as this is one of the easiest savings to make. Don’t feel obliged to pay for every employee’s fuel costs.
Armed with these top tips, employers should be able to evaluate the success of their company car scheme in relation to how much it is costing them. It’s important to think about the balance – company cars are an attractive benefit which can attract and retain your employees, but it also has to be cost effective.
Tags: salary sacrifice, salary sacrifice car schemes, company cars, controlling costs of company cars, employer tips