Staff are motivated by more than their wage, such as using a company car, especially if it’s brand new. It’s also rewarding for the business owner too, as clearly their company is doing well.
However, it’s not as straightforward as just handing over the keys. There are a few driver checks to do as well as paperwork to complete.
This article is for business owners providing staff with company cars for the first time. We look at what the business needs to do, from buying or lease insurance and tax implications. Let us take a look, starting with the obvious – the liability for the car is with the business, not the driver.
It’s Not Their Car
The vehicle does not belong to the person using it. The liability for the car is with the business. Responsibility for everything from the car’s upkeep, including servicing and maintenance, to insurance, is with the company, not the employee driving the company car as a perk.
Either lease the company cars and pay the maintenance fee, etc., with a fleet management plan. If your business buys the vehicles, secure a competitive company vehicle insurance deal.
Did you know there will be tax implications for your business when you have company cars? Your business will pay National Insurance on the value of the car at a rate of 13.8%.
Some drivers will behave slightly differently with a company car, i.e. they will be less discerning about its upkeep than if they knew they would be footing the bills for repairs.
For example, the driver may care less about cleaning the car or how they drive it. They are more likely to park too close to other cars and risk getting dents in it from other car doors opening and hitting the car. Plus, they would risk taking a road car off-road when they’re not ultimately responsible for it.
Did you know up to 25% of all road traffic accidents involve company cars, which might not sound like a bad statistic until you consider that only around 10% to 15% of vehicles on the road are company-owned vehicles?
Have a Written Policy
Every business with any kind of vehicle fleet that is driven by the employees is strongly advised to have a written policy that details everything from how the vehicle is to be looked after, from keeping to clean to make sure it is serviced promptly to penalties should the driver be found to be at fault during an accident, whether during working hours or not.
The policy should be concise and clear and should be put into the hand of every employee who is due to receive a set of company car keys – in fact, two copies should be made: one for the employee to sign, to be retained in the office, and the other to be handed to the employee, so they cannot claim not to have the information at hand.
Check Drivers’ Licences
While honour systems are noble and admirable, when it comes to the safety of your employees, your vehicles and others on the road, it is up to you to check drivers’ licences, and if you have even the faintest hint of doubt, to double-check the details with the DVLA.
Someone driving your cars without a license can not only do harm to your business reputation, but they can actually lose your fleet. The police crackdown on both uninsured cars and unlicensed drivers – and an overly lenient boss might find themselves in legal trouble for not ascertaining that their drivers are actually qualified for the job at hand.
Invest in Advanced Driving Skills
Advanced and defensive driving skills are a great way to ensure that your drivers proceed carefully on the roads.
For example, looking out for potential hazards and taking pre-emptive steps very early on and thus, with luck, avoiding incidents altogether.
A sure way to know your company car drivers are best equipped to handle the car is to contact a driving school about coming in to give a mass talk to all your drivers and, if required, pay for their attendance on a defensive driving course. If this is not viable for your company due to budget constraints, you could offer a bonus to anyone who turns up with their advanced driving certificate.
Onus on You to Provide Safe Car
One fact that sometimes comes as a nasty surprise to business owners is that the onus is on you to provide a safe car for your employees to drive. While they are usually on their own while commuting to or from work, it is your responsibility to do driving as part of their work duties.
When your business owns its fleet, it needs to ensure they’re fit for purpose and road-worthy. For example, MOT certificates were obtained and the vehicles serviced, including tyre checks. Remember, company car drivers will wear down the car tyres quicker due to heavily driving, says London based Iverson Tyres.
While drivers are usually held responsible for their own driving, there are times when your business will be seen as the plaintiff in the case.
Make sure you know exactly what your responsibilities are, and make sure your workers understand and agree to comply with this too.
In this blog post, we haven’t covered the employee’s tax obligations when driving the company car for personal use or the company fuel tax. Do your research, and if in doubt, when choosing company cars, opt for leasing on a fully managed plan where everything from upkeep to insurance is included.