If four members of staff were to share the journey to work, two times a week, they would each save £527 over the course of the yearXpertHR’s 2017 company cars and car allowance survey published has found that 71.3% of organisations have company cars, although they are usually only offered to a minority of employees – just 8.2% are given this option.
The research revealed that over the past two years there has been no change in the number of employees entitled to a company car at close to half (45.4%) of organisations.
However, there is a split between the number of organisations that have increased or decreased the number of employees entitled to a company car, at 28.2% and 20.4% of organisations respectively.
The headline reasons for the increase were an increase in headcount (52.5%) and company/business growth (28.2%); whilst the main reasons for the fall were the removal of this benefit (34.1%), the cost of running the fleet (22.7%) and tax changes (20.5%).
Whilst at a fifth of organisations entitlement to a company car has fallen over the past two years, this trend is not mirrored when it comes to car allowances. The number of staff eligible for a car allowance has fallen at just 7.8% of organisations, while it has stayed the same at 44.2% and increased at 38.8%.
Reasons given by organisations for the increase in car allowance eligibility include offering employees more flexibility and choice; increased headcount; reducing or ending company car schemes; and/or moving from company cars to car allowances for better tax efficiency.
So, who is likely to receive a company car?
Employees at director level are far more likely to receive company cars or a car allowance for ‘status’ reasons rather than job need, whereas the opposite is true for other staff.
Choice of car is also dependent on seniority. More than two-thirds (69.7%) of directors are given a free choice of car within a specified value band, while for most managers and staff the choice is limited to a defined range of models (at 58.6% and 65.6% of organisations respectively).
Directors could typically be driving a 5 series BMW, managers an Audi A3 or other staff a Toyota Prius, with the median typical list price of an organisation’s company cars for each job level at £40,000, £30,000 and £25,000 respectively.
Several factors determine which cars organisations offer employees, with the top considerations being vehicle lease costs (50.5%), size of the vehicle/fit for purpose (36.6%) and the vehicle emissions (33.3%).
And when organisations assess whether a company car is essential for an individual, nearly three-quarters (73.4%) consider the type of job role. Unsurprisingly, a high number of organisations say a car is essential for employees in a sales role.
Other employees in receipt of a company car include technical/servicing/engineer roles; maintenance/facilities/property roles; and client-facing roles. Most organisations also specify that cars are given at director, senior management and/or manager level.
Back in 1974 the National Management Salary Survey found that 15% of company directors were reported as having prime use of a chauffeur driven car, and 87% had sole use of a company car – highlighting a decline over the years of this type of benefit, even at senior level.
Sheila Attwood, Managing Editor, Pay and HR practice at XpertHR said: “Our annual survey shows that company cars and car allowances tend to be given as a perk to senior directors, whereas they are given to employees where a car is essential for their role, such as those in a sales position.
“However, our survey showed that environmental concerns and tax changes could impact company car and car allowance provision, as well as the type of cars offered. Some organisations are already responding to the tax benefits of ultra-low emission vehicles, with one-fifth planning to offer more ultra-low emission vehicles in the future.
“Companies are keeping a close eye on any legislative and tax changes that may be introduced and will adapt their car benefit polices accordingly. We expect more companies will be moving to or encouraging employees to opt for car allowances in place of a company car in the future.”
Looking to the future, one in five companies (22.3%) expect the number of employees eligible for a company car or allowance to increase over the next two years, and one-third (33.6%) of organisations plan to make changes to their company car or car allowance policy in the next 12 months.
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