Company car vs travel allowance

[J7J]

Hi,

I have wondered about this more than once and maybe there is someone that can help me on this one.

Is it more beneficial to the employer to buy a company car for an employee's use or to pay the employee a travel allowance for using his own car?

Is it better for the employee to have the use of a company car or to receive a travel allowance?

Any thoughts? Thanks!

[tec0]

Benefits for the employer. (if employer gives the company car)

It is better for the employer to give the employee a company car. The employer can fit the car out with a tracking system that will monitor use and report abuse so your property will be protected. Thus you the employer know that the car is safe, serviced and able to handle the roads.

So as the employer you know:

• Car is Safe
• Car is able to function properly
• Employee does not abuse the car.

Benefits for the employee.

The employee has a safe vehicle and knows it is being tracked so she/he will not abuse it. Secondly they know that they have road side assistance if they need it “some tracking companies include this in there bundle” Also they know the vehicle is insured if there is any accident.

So as an employee you know

• The car is safe
• The car is being serviced
• The car is being tracked
• There is road side assistance
• Job security if the car breakdown

Employer problems with travel allowance.

Firstly they have no control over the car's service records, fuel consumption and safety during working hours. They have no control over insurance and or if the vehicle is reliable or not. Secondly there is a question of road side assistance.

So as the employer you don't know:

• Is the vehicle Safe /serviced?
• Is the vehicle able to function properly?
• Does the employee abuse the car after hours?
• IS THE car insured?

Benefits if any for the employee?

The employee must maintain the car on set allowance and may not have enough if something expensive breaks thus there is a constant worry if the employee will be on time, Is the car safe during working hours? How much will the insurance be and will the allowance cover it?
What if the car breaks down constantly and becomes too expensive...

So as the employee you don't know:

• If the allowance will cover all running cost
• How a prolonged breakdown will effect job security?
• Will the allowance be enough to cover insurance?

[sterne.law@gmail.com]

You can have a car policy linked to travel/car allowances.
For instance the car must be serviced, may not be over xyz sms etc.
In this way the employer retains some control on reliability and appearance.

[tec0]

You can have a car policy linked to travel/car allowances.
For instance the car must be serviced, may not be over xyz sms etc.
In this way the employer retains some control on reliability and appearance.

That's true but you still have to deal with the fact that you as the employer have no control over the vehicle after hours. Sometimes people just don't take care of there stuff and in the end you have an employee that might be late or worse the next day. Where as a company car you have the ability to track and control movement.

But It is true there is no right or wrong answer here so I think it comes down to the type of work the type of vehicle needed and what expectations needs and wants must be looked at.

[flaker]

i think the questionnaire is also looking at it from a taxable point of view. what are employer benefits? employee benefits?

[Dave A]

i think the questionnaire is also looking at it from a taxable point of view. what are employer benefits? employee benefits?

Assuming the travel allowance is covering all the costs adequately, total mileage is not exceptionally high, and private travel is much lower than business travel, the big break for the employee which the employer doesn't get is the employee doesn't have to deal with recoupments when selling the vehicle.