Company Car Advice: How to choose the right company car

As well as understanding how much your company car will cost you in tax you’ll also want to carefully consider the type of car that’s right for your needs.

Review our company car tax guide here

Company cars are usually provided for a period of three to four years so making the right decision on the car and on any options is particularly important.

2018 Update: WLTP is impacting on UK vehicle availability – watch this short video to find out more about this issue.

Here are a number of factors that you should consider:

What type of journeys do I currently use my car for?

How might my needs change over the coming years?

What type of fuel best meets my needs?

What are my other priorities in selecting a car?

We’ll now take a look at each of these in more detail.

What type of journeys do I currently use my car for?

Is the car mainly used for short trips around a town or city or do you cover long motorway distances?

For city driving, a smaller car can make navigating city streets and parking much easier. Also, as city driving is the least efficient type of journey, a car with a more economical engine can be beneficial.

Electric cars and hybrids could also be worth considering if you drive in a city that has, or is likely to introduce, emissions related congestion charging.

For motorway journeys a more powerful engine might be more appropriate. For high mileages diesel cars are still hard to beat for overall economy. It might also be worth considering automatic transmission; these gearboxes have improved hugely in recent years and often provide performance and economy that is better than the equivalent manual.

Do any of your regular journeys take you on unmade roads or into less accessible areas?

If you travel frequently in poor weather conditions or on muddy roads it could be worth considering four wheel drive. The number of vehicles available with this safety feature has grown in recent years and is no longer just available on SUVs or off-roaders.

Many systems are ‘part-time’ so only come into play when conditions are difficult, this helps to reduce the impact on fuel economy that permanent four wheel drive can have.

How might my needs change over the coming years?

Is the size of your family likely to grow or shrink in the next three to four years?

If flexible space is important it could be worth considering an SUV rather than a standard hatchback or saloon. The range of SUVs on the market has exploded in recent years with nearly all manufacturers now offering at least one option. Look out for clever seating systems that allow a variety of combinations of luggage space and passenger room.

Is your job likely to involve the same kind of journeys in the future?

If you think your annual mileage or journey types might change consider cars that would be equally at home in the city or on the motorway. If the length of your commute is likely to increase, fuel economy could become a more important consideration.

Do you have access to any other vehicles or is this the only car in your household?

If you have access to other vehicles you might be able to choose a car with a narrower range of capabilities, such as a coupe or convertible. If it is to be your only car you’ll probably want to consider more practical options.

What type of fuel best meets my needs?

Standard petrol or diesel combustion engines

Most modern combustion engines now employ turbo or superchargers to gain more power from smaller, more economical engines. It’s no longer possible to look at the size (capacity) of an engine and assume that bigger means more powerful. If performance is important to you look instead for Power (usually in BHP or PS) and Torque (usually in Nm or ft lb) figures.

Electric only vehicles

These cars rely solely on battery power, being charged by plugging them in. As battery technology is improving so is the range of electric vehicles, making them genuine alternatives for those doing the average commute. The major drawbacks are the limited availability of public charging points and the length of time it takes to recharge batteries. If your employer provides charging points at your place of work this could be an option worth considering, particularly as the cars attract the lowest rate of BiK tax.

Hybrids

These cars combine either petrol or diesel engines with an electric motor. Hybrid cars now come in a huge variety, including: Plug-in hybrids, Extended range electric vehicles, Full, Mild and Micro hybrids. While most hybrids focus on improving fuel consumption with the aid of the electric motor, others use this to provide more power and better performance.

Many hybrids now come with the ability to travel a certain number of miles on battery power alone. From 2020 this ‘zero emissions’ range will impact on company car tax, with lower rates for cars with longer electric ranges. See the table at the end of this guide for the tax rates from 2020.

If you’d like to know more about alternative fuelled vehicles see the SMMT guide by clicking here

What are my other priorities in selecting a car?

Cars now come with a wide range of features, both as standard and as optional extras. It’s easy to get carried away when choosing your specification so it’s worth thinking about what your priorities are to keep the P11D value in check:

Safety

Euro NCAP ratings provide a good indication of how safe a car is in the event of an accident but most cars now come with a list of Passive and Active safety features, either as standard or as options, designed to keep you out of trouble as well as to survive any incident.

Passive systems operate with no input from the driver, they include items such as airbags, active head-restraints and seatbelt pre-tensioners.

Active systems operate in conjunction with the driver, they include, electronic stability programs, lane departure warnings, intelligent cruise control and automatic braking.

For a summary of the most common features and how they can keep you and your family safe visit the RoSPA website

Connectivity

Many cars now come with kit like satellite navigation and digital radios (DAB) as standard or as low-cost options. The latest round of technology takes these a stage further by providing access to the web either via your smartphone or using a built-in SIM card.

Using the in-car ‘infotainment’ screen these connected systems allow access to a range of useful information while you are travelling including, weather and traffic reports, parking updates, social media access and music streaming services.

Systems with a built-in SIM card can also provide WIFI access to passengers in the car.

Brand / Image

The line between ‘premium’ and other car brands has blurred in recent years. Traditional executive or luxury car makers are now producing smaller, more affordable cars and everyday brands are delivering cars with features previously the preserve of premium brands.

If the brand of your company car is important to you it’s worth noting that premium brand cars often retain more of their value over the first few years, this means that their monthly lease prices can be lower than you would expect.

Take some time to complete the company car checklist which you can download here. This should provide you with a clearer understanding of the ideal car for your needs.

For our comprehensive guide to company car tax click here.