The five ways to save money on the company car

With so much competition and other factors making profit margins razor slim, it makes sense to want to pinch pennies when it comes to mobility for your employees. Having a company car for employees can cost quite a bit so some companies are foregoing them completely.

Between the cost of the car, and paying the BIK for the employee it can be quite costly to have them.

There are ways to save money with a company car so it shouldn’t be discounted completely. If you want to make sure that your employees are taken care of but still not spend too much money then you have to dig in a bit to find out how to do so.

In this article, I will go over several ways that your business can get a company car for an employee and still save some money in the process.

1 – Buy used

Buying used is often a great way to save money on a company car. They don’t even have to be that old to save a lot compared to the same model brand new.

For instance, even the best used cars to buy can be markedly cheaper and still only a few years old. Not only will it cost far less to buy one of these cars, but the ongoing costs to own it will also be much lower.

If you opt to pay the BIK for your employee so it doesn’t cost them any money, then you will certainly save there since the value of the car will be far less than a new one. Also, the insurance costs per year will be much less. Lastly, the registry renewals will be cheaper with every passing year as the car depreciates.

There is a disadvantage to owning a used car as there will be higher maintenance costs from a few extra years of wear and tear from before the car was bought by your company. However, there may still be some time left on the warranty if it is not older than a couple of years.

2 – Lease it

There are some advantages that businesses get when leasing that an ordinary person off of the street can’t access. Which makes it a viable option for a business to lease the company car for their employee rather than buy it outright. One such advantage is being able to claim back 50% of the VAT on the monthly payments.

That’s for a regular car that an employee will use to commute and do some company business in. If you have a van that an employee is going to use to do their work, then this claim is 100% of the VAT.

The car has to be used for work and not for personal use to get this claim, however.

If you opt to not go with a used car, then leasing may be the better option rather than buying since you don’t end up paying the depreciation of the vehicle. At the end of the term, there should be no further payments, assuming the car is in good condition.

There are savings on ongoing costs as well since routine maintenance is usually covered and any repairs will come under the warranty.

3 – Split insurance costs

If your employee will use the car for both business and personal uses then it makes sense that you would split the cost of the insurance. It saves them money by using a company car and paying less than normal for insurance and they also don’t pay for many of the usual ownership expenses of their own car.

If the car is on the road and used only during work hours then you are responsible for all of the insurance costs. In this case, try to find the right model that costs less to insure to save some money there.

If you have multiple cars being used for several employees then it makes sense to go for fleet insurance to save by essentially buying bulk.

4 – Seek tax relief

There are a lot of tax benefits that can be claimed for your company car, so choose the car wisely. For instance, if you choose an electric or hybrid car that produces little to no CO2, then there are some very attractive tax breaks there.

Then, there are different breaks that come from how the car is used. If the car is only used for business purposes then there is a break to be claimed there. Also, when the car is used for mobility purposes there is another break. Many businesses opt for a pool car rather than a company car for an individual for these tax purposes besides the other obvious savings.

5 – Choose the right type of vehicle

To take advantage of some tax claims, having a car that runs on renewables is a good place to start. We mentioned the tax breaks that come from a car that has reduced CO2 emissions, but there are also ongoing costs that are reduced by these cars.

An electric car costs just a few pounds per month to charge and the maintenance is also very low. There are no oil changes or other wear and tear that a typical combustion engine has. And many repairs can be done remotely by using software patches.

If an electric car is not practical for whatever reason, then you may want to opt for diesel. There is a 3% surcharge over petrol due to the dirty nature of this fuel. But in the long run, fueling the car will cost less money. This is especially true if the vehicle puts on a lot of miles in a year.


It takes a bit of research as you can see when it comes to finding the right way forward when buying a company car. However, you can also see that it is not as expensive as you might have thought when you factor in the savings possibilities.

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