Company cars for new starters

Author: MILES PETERS

For business owners, there are many things to consider when recruiting new staff and one of the biggest costs is a new company car that comes as part of the package you offer your new employee.

Of course, on day one, you never know how things will pan out so you’ll likely have that employee on probation until their abilities can be confirmed.

But what about that company car? If the employee doesn’t work out, you could find yourself with money tied long term to a company car that you no longer need. Worse, you could pay out expensive termination charges.

One serious option is to hire a car during that probationary period.

A rental car can be new and modern, such as the latest Ford Focus or BMW 1 Series, making the right impression on clients. The car will also be fully insured for business use. This offers the ultimate flexibility until you’re ready to put in that company car order and can even be extended to three of even six months if the employee’s car choice is on back order.

You don’t have to worry about the condition of the car, its brakes, tyres and so on as the rental company can cover all those legislative duty of care issues for you. Better still, the rental car can be tax efficient as it is a business expense and can be written off against your income before tax.

One thing to be aware of if you do hire a car is that whilst rentals over 30 days may be exempt from company car tax, this only applies if the vehicle does not have any private use. Simply commuting from home to work doesn’t count as private use but if the employee was able to use the vehicle for social/domestic use at weekend then a BIK (benefit in kind) charge may apply.