"I have to say using Aaron Wallis Recruitment has been nothing but an absolute pleasure. I've used many agencies over the years as the client and the candidate and its not always been a pleasurable experience! My consultant George Humphries has been an absolute star"
In this section
Company Car or Car Allowance?
Company Car, Car Allowance or Mileage Allowance – what is better?
The ultimate guide to company car benefits for employees and employers
In this Guide:
Other Points to Consider:
What is a car allowance?
A car allowance is a company car scheme where a business provides staff with a financial benefit, rather than a company-owned car. The allowance is provided for employees to purchase or lease a vehicle, or even to maintain their current car. This is usually provided monthly.
Some business roles require the use of a vehicle more than others, and field sales is undoubtedly one of those. Your sales teams will be out and about following up leads and servicing existing clients much of the time, so you’ve got to figure out the most cost-efficient and beneficial way for them to do so.
There are three standard options available: a company car, a company car allowance, or a mileage allowance. There are pros and cons to each, including tax implications. Every case and individual preference of both employer and employee is different for a myriad of reasons.
Logic will prevail in most cases. For example, if you’re recruiting for an experienced field sales professional, the chances are they will have enjoyed a company car or received a car allowance in their previous role. It’s likely, therefore, that they would be looking for the same deal within the package you’re offering.
Handing over a company car doesn’t end with you buying it and presenting the employee with the keys. Your business will still be responsible for ongoing repairs, MOTs (after three years old) and servicing. You’ll also be liable for vehicle insurance, driving costs (since your employee will still claim a mileage allowance to cover petrol), and the need to sell the vehicle when it reaches a certain age (or the employee leaves).
Most companies then operate a ‘fuel card’ where the fuel is paid by a credit facility at the pump, invoiced by the ‘fuel card operator’ to the employer, paid by the employer and the employee pays a contribution towards the fuel for their own personal usage. Alternatively, although rare, some get their sales team to expense all fuel and then claim back the receipts after deducting an amount for their own private fuel.
Tax implications for the employer
There are tax implications to a business for providing a company car. The business must pay Class 1A National Insurance on the benefit. However, you can reclaim a VAT element on fuel costs claimed by the employee, plus you can claim the cost of purchasing a car through capital allowances (that rate is dependent on the vehicle’s CO2 emissions).
If you go down the leasing route, you can only claim 50% of the VAT back. 100% is available only in cases where the vehicle is solely for business use.
Tax implications for the employee
For the employee, receiving a company car is a benefit in kind, so they are liable to pay income tax and national insurance on this at their normal rate. This tax and NI is payable through PAYE providing the employer notifies HMRC first and the tax paid is dependent on the type of vehicle and the P11d value.
Your staff can still claim a mileage allowance when they have a company car, with the amount depending on engine size. For petrol cars, the September 2019 Government advisory is 12 pence/mile for 1400cc or less rising to 21 pence/mile for over 2000cc. For diesel, it’s 10 pence/mile for 1600cc or less, rising to 14 pence/mile for 2000cc or more.
There are further benefits for the employee – they get a new car every few years, and they don’t have to worry about maintenance or servicing costs.
However, employers must also be aware of the Corporate Manslaughter and Corporate Homicide Act 2007, which makes it easier for the families of victims to make a claim against organisations if they are found to be negligent in the upkeep of the vehicle, or the driver is deemed to be careless. The fines appropriated are unlimited and apply to both companies operating company cars or employees driving their own car on behalf of your business.
As a minimum action point from this advice, you must ensure that your company meets the required health and safety regulations and has a regularly reviewed policy on using cars for company business to ensure that you are adhering to changing laws. To find out more, the HSE has several guides for safe driving at work.
A company car allowance
If your staff require a vehicle, an alternative is to offer a company car allowance which is added to their salary and paid monthly.
Receiving a company car allowance gives your staff the means to either lease their vehicle or buy one outright, using the allowance funds to pay for a loan. Rather than being presented with a make or model of your choosing, they can select whatever car they like, new or nearly new. Of course, they are then responsible for all insurance and maintenance costs and replacing the vehicle when it becomes economical to do so. Keep in mind your staff should have a private car that looks good and won’t embarrass your business when it’s out on the road, and most companies have some kind of policy such as the vehicle must be less than five years old or ‘no soft tops’.
You, as a business owner, can decide how much the car allowance should be and include it in the employee’s contract. Based on an average of projects worked by Aaron Wallis, we suggest that benchmark figures, should be:
- £8,200 to £10,300 for Sales Directors, Commercial Directors and Business Unit Directors;
- £6,500 to £8,200 for Senior Sales Managers;
- £4,800 to £6,500 for Sales Managers;
- £4,200 to £4,800 for Business Development Managers;
- £3,600 to £4,200 for Field Sales Representatives.
As their employer, you will pay tax and national insurance on the car allowance at their normal rate as part of their salary, making the tax elements for both parties much more straightforward than operating a company car.
Most companies then pay a mileage allowance on top of the car allowance, which is claimed via expenses.
The car allowance mileage rate for those receiving a car allowance will be up to the maximum allowable – currently (in 2019) this is 45 pence/mile up for the first 10,000 per tax year, and 25 pence/mile after that), and is intended to cover the cost of fuel and the wear and tear created by business mileage. However, most companies that provide a car allowance then offer mileage rates at a lower amount; typically these are 10p to 25p per mile.
Anyone potentially driving more than 25,000 miles a year for business should consider opting for a company car because the ‘wear and tear’ and depreciation costs of this substantial mileage are unlikely to be met by the reducing mileage rate.
For many sales employees using a car is not usually part of their daily routine. However, occasionally they may be required to use a vehicle – perhaps for an ad hoc meeting, to drop off some samples or for an annual service meeting.
It makes no sense for an employee of this type to receive a car allowance, even less so a company car. However, they still need to be reimbursed for using their vehicle for work. In this case, they can claim the normal mileage rate (45p/mile up to 10,000 miles, 25p thereafter at current HMRC rates) without any tax implications. It’s up to the employee to make sure their insurance covers use for work, and you, as the employer, should have the insurance certificate on record. If the employee doesn’t have valid insurance for work then the employer should make a company vehicle, or hire car, available.
For the employee, this scheme can also be quite lucrative as the fuel required per mile and a contribution to the ‘wear and tear’ is unlikely to be above 20p per mile. Therefore, under current HMRC rules the employee can profit by up to 25p per mile for using their car, and it is not classed as a ‘benefit in kind’.
There may be tax benefits for getting a company van rather than a company car. However, this must be job-related – your vehicle must be built for carrying goods or burden. Fully laden, the gross vehicle weight should not exceed 3,500kg. Work buses or minibuses do not count as vans, but double-cab pickups can be, which is currently making them an increasingly popular option as a company car. The bonus of a van for the employee is that everyone starts with the same fixed rate of tax, which might reduce under certain conditions. If the van is used for the employee’s commute to/from work there are likely to be further tax implications.
National Insurance (NI) is currently applied to almost all types of income, including, in most cases, car allowances.
Car allowances are typically paid as part of an employee's salary or wages. While it may be shown on a separate line on a payslip, it is still deemed as ‘income’, and therefore NI is applied.
It is also vital to detail that in this circumstance, Employer’s National Insurance Contributions (ENICs) will also apply.
Exceptions to paying National Insurance on a Car Allowance
You will need to speak to an accountant for current guidance, but if the car allowance meets certain conditions and is paid as a separate, standalone benefit, it may not be subject to NI. A current example in 2023 could be a liveried van with the company logo.
For up to date and valid information about the tax implications of a car allowance, it is recommended that you consult with a tax professional or seek guidance from HM Revenue and Customs (HMRC).
Points to Consider
The rule of thumb for employers and employees is to check on the tax implications and benefits of any form of a company vehicle, company car allowance or mileage benefits. Different vehicles and the amount of usage will change from person to person. What’s beneficial for one will not be for another, and the government offers a useful company car calculator for speedy comparison.
Many new employees will be nervous about taking on a long-term car lease. We have had many candidates that have always had company cars and are looking to join a company that solely offers car or mileage allowances.
Understandably they do not want to commit to a three-year lease contract which typically has significant penalties for breaking contract.
In this instance many of the traditional car rental firms, such as Europcar, Thrifty and Easycar, offer three or six-month contracts. Obviously the employee will pay a weighty premium for this that typically erodes all of a car allowance but does de-risk the situation in the short-medium term until the employee has passed their probation.
There is not a ‘one size fits all’ solution, and in some instances, a mileage allowance is better for both the employer and employee.
However, usually, a company car or car allowance is better for both parties if the expected mileage is going to be over 6-8,000 or so business miles per year. Also, a company car, or allowance, allows some control over both health and safety issues and the type of car that is used to represent your business. A car or car allowance can also be the benefit that clinches your perfect candidate.
We hope that this quick guide, in conjunction with the appropriate links to HMRC and HSE advice, provides you with the information to make the best decisions for your own individual company’s situation.
Watch a video summary on the decision from the Managing Director of Aaron Wallis, Rob Scott.
Date published: 19th November 2022
Date published: 28th November 2022
Submit your CV
Take the first step towards your new role today
With hundreds of jobs available, now is the time to look for your perfect position
by Sam Childerley
About the author
Sam Childerley is a Business & Marketing professional who started his recruitment career in 2021. He is a specialist recruitment consultant, who operates across in the UK and is based out of our Milton Keynes Office. Sam is dedicated to helping job seekers and employers find the right fit for each other and believes that the best decisions within recruitment are made when both sides are happy. He is passionate about developing the best possible recruitment experience for everyone involved and is committed to providing the best advice and support to employers and job seekers alike.
From our blogRead more
Our employers say...
Very professional service and will certainly be in contact for future recruitment.
Director, Blakedown Sport & Play Ltd
We were impressed not only by the quality of candidates you found for us but also the level of information, preparation and qualification you put into the process. You continually kept us informed of each person’s feelings about the process, which is very important but often overlooked. I am looking forward to working with your company again in the future.
Commercial Director, Incentive Facilities Management
Giles Phillips is a rare find in the minefield of sales recruitment; an honest and thoughtful recruiter who considers the needs of both the client AND the candidate to create perfect role matches. I look forward to working with him again in the future.
Marketing Director, City of London Police
I just wanted to thank you for your help with our recruitment process which went very smoothly and has – we hope – found us just the person for the job!
Managing Director, Citrefine International Ltd
I have always found Rob to be very knowledgeable about our industry sector, and it is refreshing to see after all of these years that Rob continues to quickly and accurately understand my requirements.
HR and General Manager, THK
In an industry where people over promise and under deliver, Rob and his teams have consistently provided a high-quality service. It is great to deal with someone that has an excellent understanding of UK industry, and a passion for sales.
Sales Manager, TR Fasteners
Since joining DSGi, Rob has been a supplier of permanent staff and has performed to an extremely high standard, successfully filling 98% of roles he has worked on. If anyone is looking for a good sales and marketing based consultancy with an informal yet professional approach, I would recommend Rob.
Senior Recruitment Consultant, DSG International
Aaron Wallis has continuously provided us with suitable candidates that have been proactively sourced. Having used countless recruitment companies, Aaron Wallis are the only company that I can count on to deliver.
Managing Director, JARK Healthcare Recruitment
Really good service. Just the right amount of contact and easy to deal with.
HR Manager, Zircon Software Ltd
As always we were extremely impressed with Rob's understanding of the role and our specific needs.
Managing Director, Speck & Burke
Generally good standard of candidates. Especially liked the personality profile. Overall good value for money and will certainly use you again.
Managing Director, Medicash
We appointed Aaron Wallis in February and the successful candidate, out of the six which Aaron Wallis introduced, was able to join Alphametrics before the end of April. The whole process took less than three months. I would recommend Aaron Wallis' services to others without hesitation.
Chief Financial Officer, Alphametrics
George came recommended by a colleague and has been a pleasure to work with. He was great at updating us on his progress and ensured a great experience for both client and candidate.
HR Manager, Annapurna Recruitment Ltd
I have used Aaron Wallis to fill a number of our Sales Development Manager roles and I have found them to provide a very professional service. I will use their services again in future recruitment campaigns.
HR Business Partner, Greene King
I can't fault Sam or AW! Sam was a pleasure to work with and provided great support from the start. Sam always provided me with timely updates when required and provided outstanding candidates!
Director, Waste Managed Ltd
Rob’s knowledge of the recruitment industry and his thoughts and how to make it better for his clients have always been eye opening. I would recommend Rob to anybody who is looking for a professional, knowledgeable and flexible recruitment specialist.
CEO, Friday Ad Online Services
Thank you for your dedicated help during the recruitment process - we came to you after unsuccessfully searching elsewhere, and hired, not one, but two! Quick response times, and a really personal approach, without being pushy.
Managing Director, Accora Ltd
Sophie did a great job at understanding our business and our needs, she is extremely professional and we hugely benefitted from her experience and expertise.
HR Manager, The Data Privacy Group Ltd
George is a rare find in the world of recruitment - communicative without being pushy or over-bearing. He listens and understands what the customer needs as gets to know the business to ensure he provides fully competent candidates who fit.
HR Manager, Big Dug
Giles is highly professional and was a pleasure to work with. He achieves excellent results through his personable skills and tenacity. I have no hesitation in recommending Giles to anyone who considers employing his services.
Commercial Director, G4S Government & Outsourcing Solutions
I really liked the YouTube presentations which made the service seem both simple and accessible. The company came to see me, and my management team, at short notice to present their service and I liked the support and advice that I received about maximising the results from the applicant.
Managing Director, Leisuresec plc
I found Aaron Wallis to be very professional and efficient, taking time to understand the role and the type of candidate we were looking for. The candidates they put forward met our criteria and were of a high standard. The service they provided was exemplary and I would have no hesitation in recommending them, and will certainly consider using them again in the future.
HR Assistant, Fischer Connectors Ltd
Rob is a true recruitment professional that goes the extra mile that I have never experienced from any other recruitment agency before. If you need sales people call Rob or someone in his team, as they really are experts in sales recruitment.
Sales Director, Inside Business
Thanks for all your help during the recruitment process. I have been extremely impressed with Aaron Wallis especially when compared to other agencies we have dealt with. I really felt you grasped the type of person we required and found strong candidates.
UK Sales Manager, Nexcom
I could not suggest anything I would like you to do better. The service you provided materially exceeded my expectations. I would especially like to commend Simon Bonner; he is easily the best recruitment consultant I have ever dealt with. I particularly valued his advice and guidance throughout the recruitment process.
UK Sales Manager, BTS Holdings Limited
George is a joy to work with, and I'd recommend him to anyone seeking that unicorn hire - he found me mine, and I'm delighted!
Director, Education Support
Understood the type of person we were looking for and good follow ups - not too frequent.
Managing Director, bigHead Bonding Fasteners Ltd
Our candidates say...
I can honestly say that the time and expertise you gave me was way beyond any other recruitment consultant I dealt with. You are a rarity in your industry.
S. Akers, Candidate
Sophie helped me secure a new role I have been searching for. She took her time to explain clear and concisely all I needed to succeed at the interview stage. Thanks again Sophie!
O. Oladejo, Candidate
The staff at Aaron Wallis were fantastic. Throughout the process, they maintained excellent communication and I always knew where I stood.
M. Owusu, Candidate
Sophie contacted me about a role explained the details clearly and made sure I was ready for the interview. She kept in touch every step of the way till I started the job. Thank you Sophie for a great experience.
S. Powell, Candidate
I had a very good experience with Aaron Wallis. The company itself is offering great content for all things related to the hiring process. I definitely recommend.
J. Ostermeier, Candidate
The Recruitment agent I used, Simon, was extremely helpful and really went the extra mile to ensure all of my questions were answered, and that I felt as comfortable and prepared as possible. Very professional company and would definitely recommend to others. Thank you Aaron Wallis!
A. Callaby, Candidate
Friendly, proactive, communicative. Overall a really positive experience.
R. Houston, Candidate
Fantastic service, helped me find my ideal job quickly and smoothly. Would highly recommend them.
C. Caine, Candidate
Sophie has been fantastic and always so attentive, highly recommend.
T. Ashbourne, Candidate
Simon was knowledgeable on his clients history, background and what their requirements were and he worked around time zones, holidays and a pandemic to get the right result.
J. Tooze, Candidate
Wanted to say a huge thank you to Simon Bonner who has just helped me secure my new role. He was one of the most professional recruiters I have ever worked with.
J. Marcinkiewicz, Candidate
I had a great experience. Helped me every step of the way to get my new job. Sophie was very polite, kind and helpful!
J. Parnham, Candidate
I would highly recommend thank you to Darren for helping me secure my new job role! Excellent service all round!
G. Thompson, Candidate
Excellent service, very professional and friendly, would and have, recommended Aaron Wallis.
E. Heley, Candidate
Professional and responsive from start to finish. I would highly recommend. Special thanks to Sophie J for her help and support throughout.
N. Leney, Candidate
I would highly recommend Aaron Wallis Recruitment, Darren was extremely helpful and provided me with plenty of advice and support throughout the whole process.
D. Bretherton, Candidate
Fantastic customer service, communication was brilliant, happy polite people to talk to, made everything a lot easier and smoother. Thank you for all your help getting me back in the work force, Keep up the good work :-)
K. Everitt, Candidate
Less than two weeks after joining Aaron Wallis I was offered my new job. I got a £10,000 rise in my basic salary, car allowance, a laptop and many other perks, which will help to further my career. I definitely would not have found my dream job without the help of Aaron Wallis.
C. Hoy, Candidate
I had the absolute pleasure of working with George Humphries on finding a placement best suitable for me.
A. Van Der Mescht, Candidate
George is a fantastic recruitment agent and provides a great service. It was a pleasure I thoroughly recommend George to anyone.
C. Beaugie, Candidate
Rob was really helpful when I was putting together a presentation for the second stage interview. Overall their communication was great and kept me updated of any progress
J. McGrattan, Candidate
George above and beyond to make sure I had everything I need to secure my new role. Outstanding Professional.
A. Kirkland, Candidate
Very polite and friendly and was very helpful finding me my next new role.
K. Craggs, Candidate
The service provided by Aaron Wallis has been just great. I was constantly informed about what was going on with the process interview and the agent has always been supportive and kind to me.
L. Colagrossi, Candidate
I have to say using Aaron Wallis Recruitment has been nothing but an absolute pleasure. I've used many agencies over the years as the client and the candidate and its not always been a pleasurable experience!
L. Knowles, Candidate
Managed to get me placed within a week! Really friendly and easy to deal with. Always available for a call and my biggest challenge was I was in work at the time I was looking for my next opportunity (which is stressful) but Sam made that easy.
P. Fitzsimons, Candidate
Sam was by far the most professional and helpful of any individual I've ever dealt with through a recruitment agency. He was supportive and thorough throughout the process. He definitely goes the extra mile for you. A pleasure to deal with. I would highly recommend him. An asset to Aaron Wallis
M. Wyer, Candidate
Excellent experience. Knowledgeable staff and really went the extra mile. Found my ideal position and I couldn't be happier. Special shout out to Sam and George: who made the process smooth and easy for me. Highly recommend.
K. Pearce, Candidate
Aaron Wallis is an outstanding recruitment agency specialising in high calibre sales positions. I was working directly with Darren Dewrance who went above and beyond my expectations in sourcing me my perfect role. I was kept in regular communication with Darren and he worked extremely hard to secure my dream job. Highly recommended and Thanks Darren for all your expertise and hard work.
R. Sealy, Candidate
Perfect from start to finish. Simon deserves a shout out. Best recruiter there is. If you need a job, this guy will get you one. He's like the super man of recruiters. Top man, can't recommend him enough.
M. Crisp, Candidate
When talking with Simon you felt relaxed cared to help you find a position that suited your needs
D. Pinder, Candidate
For anyone looking for work, I can't recommend Aaron Wallis highly enough.
C. Rockliffe, Candidate
A great recruitment company to work with. Excellent experience with Aaron Wallis through the entire recruitment process. The team was really professional and extremely helpful. Darren was a pleasure to work with. He was friendly, supportive and gave me great advice. Thank you very much!
A. Bauchet, Candidate
The most professional recruitment agency I've ever worked with. Robert Scott was extremely proactive and send me a detailed briefing before each interview, ensuring I was well prepared.
D. Bermant, Candidate
Darren at Aaron Wallis was really encouraging and helpful. He was very responsive and regularly made phone calls to explain the job opportunities available, and guided me through the application process.
A. Brown, Candidate
George Humphries was a complete professional at every point, from our first phone conversation to his “good luck tomorrow” text on Sunday before I started in my new role.
E. Fry, Candidate
I have to say coming across and having dealings with Aaron Wallis proved to be very successful. Being highly experienced did not seem to count for much during my job search bit a conversation with Robert Scott gave me a real confidence boost and enabled to get a position at the age of 63. Great service!!!
D. Burgess, Candidate
Very good advice and support was given during the course of the interviewing process. Potential job seekers would be well advised to use this company whilst looking for their new career.
R. Speakman, Candidate
Wanted to say a huge thank you to Simon Bonner who has just helped me secure my new role. He was one of the most professional recruiters I have ever worked with he was supportive really quick at replying and really put me at ease.
J. Marcinkiewicz, Candidate
Good swift process with Aaron Wallis, informative regarding the role and the process was moved at a good pace with healthy interaction. Would recommend them to anyone pursuing a change.
S. Bartlett, Candidate
Aaron Wallis (and in particular Rob Scott) have been fantastic throughout the recruitment process, and even a few months down the line, still continues to care. Rob clearly cares about each individual and has a wealth of knowledge and expertise, which shows in the work he does. Each candidate is not just a number, and the support received from Aaron Wallis has helped me get a career which I truly enjoy.
M. White, Candidate
Aaron Wallis Sales Recruitment are a very friendly and professional recruitment organisation who listen to your needs, work with you and act on your behalf which sets them apart from many of their competitors who in my experience are willing to throw anything at you. We discussed my history, my preferences and my wishes - one opportunity was introduced. It was perfect. I start at the end of June.
R. Buckley, Candidate
The detail put into the preparation for interviews and the detail of the job description was first class. Rob and Simon in particular are amongst the best I've ever dealt with.
K. Peacock, Candidate