How to create a company car policy
Company car leasing is a practical way for businesses to provide employees with safe, reliable transport. A strategic company car policy helps employers manage costs effectively while addressing key areas such as eligibility, maintenance, and insurance.
This guide will outline everything you need to know about creating a clear, effective company car policy and maximising the benefits of business leasing for your team.
Why is a company car leasing policy important?
A company vehicle policy is important for several reasons. It ensures legal compliance by setting consistent standards for employees to follow and encourages safe, cost-effective management of company-leased vehicles. It’s also a great way to outline how a vehicle should be used and can prevent misunderstandings about responsibilities, insurance, and tax implications.
Without a structured company vehicle policy, employers could face challenges like unauthorised vehicle use and complications surrounding accidents or damage. A company car policy can not only help safeguard your business but also provides employees with clarity and guidance when they need it most.
How to create a company car policy for employees
Follow these steps to develop a comprehensive and structured company car policy.
Create eligibility and allocation criteria
Start by defining who is eligible for a company car, which could be based on job roles, seniority, or specific business needs. Include the allocation process, specifying criteria such as mileage limits, environmental considerations, or maximum budget.
Clarify rules and expectations
Set clear rules for employees on how they can use company vehicles. Cover things like personal usage, fuel reimbursement, and driving standards. Outline prohibited activities, such as driving under the influence, using the vehicle for personal profit, or participating in illegal activities. Clear expectations like this will prevent misuse and ensure each vehicle is used responsibly.
Explain vehicle maintenance procedures
Specify who is responsible for routine maintenance, servicing, MOTs, and repairs. Include a breakdown of potential costings and highlight the need to cover any employee-incurred expenses.
Describe the insurance coverage provided
Outline the insurance coverage for company vehicles, including liability, collision, and comprehensive protection. You’ll also need to explain the employee’s responsibility, such as keeping a valid driver’s license and reporting any changes or penalties right away.
Clarify your incident and accident policy
Provide a straightforward process for reporting accidents, incidents, or thefts. Include the timeline for reporting, any necessary documents, and the procedure for repairing or replacing the vehicle.
Outline the tax implications
Ensure employees understand the tax implications of using a company vehicle, such as the Benefit-in-Kind (BIK) tax. Think about providing links to additional resources, such as HMRC’s guidelines on company cars.
For more details on Benefit-in-Kind (BIK) tax, check out our guide to the tax implications of business car leasing.
Explain your company responsibilities
By clearly defining your responsibilities as an employer, you can build trust and accountability when introducing your company car lease policy for employees. You’re also responsible for providing vehicles that meet business needs, ensuring they are properly maintained and safe to use day-to-day.
Other considerations
Other considerations include scenarios like employee resignation or long-term illness. Clearly state how these situations will affect vehicle allocations and outline the process for returning or reallocating vehicles.
For example, specify whether an employee who’s leaving must return the vehicle immediately or within a set timeframe. There might be other schemes your company can introduce too, such as salary sacrifice and car allowances for employees.
Get help with company car leasing with Synergy
Company car leasing can be an excellent solution for businesses, and our leasing consultants are here to help. Whether you’re introducing a company vehicle policy for the first time or managing ongoing requirements, we’ll work with you to create a policy that fits your needs and budget.
Synergy is proud to have been awarded the Feefo 10 Years of Excellence Award for outstanding customer experience and named Broker of the Year 2024 in the Broker News Awards.
If you’re ready to explore your options, contact us today for expert advice and support.
