Nearly three-fifths (58%) of organisations that operate company car schemes offer employees the option of a company car or a car allowance, according to our latest research. The findings also reveal that over a third (35%) only provide a car allowance. Meanwhile a minority (just 7%) provide cars only to staff. Our survey, which received responses from 57 employers, together employing just below 1 million staff, found that most organisations provide company cars (or an allowance) to managers and directors as a perk or to any staff who need them for work, for example sales staff. However, very few respondents (just one) said they provided company cars to all employees. And just two offer them to directors only. 

The bulk of respondents provide company cars to staff on the basis of status, that is, offered as a perk or benefit, typically linked to seniority or job grade, rather than business need. Nearly three-quarters of respondents (72%) did so, while less than one-in-ten do so on the base of user need only. However, just below a fifth (19%) provide cars on the basis of both status and user need.

Typical list prices

For non-management employees, the typical list price of the cars on offer is generally between £35,000 and £55,000, though a significant proportion offer these staff cars with lower list prices. For managers, while most firms mainly offer cars in the same list price range as those for non-management staff, a significant minority offer more expensive models, worth between £55,000 and £75,000. For directors, the list prices for the models available drifts higher, with the main range at between £55,000 and £75,000 but with almost as many organisations also offering cars worth more than £75,000. The price categories that participants offer different staff groups are shown in the table below.

Average monthly car allowance

The value of monthly car allowances rises, as you might expect, with seniority. For non-management staff, the median monthly car allowance for hybrid or electric vehicles is £458. The average is higher, at £491, indicating that the outliers here tend to pay above the median rather than below it. (For petrol or diesel cars, the median is £429 and the average is almost identical.)

For junior management, the median monthly car allowance for hybrid or electric vehicles is £500. The average is a little higher, at £515, again indicating that the outliers here tend to pay above the median rather than below it, but to a lesser extent than for non-management staff. (For petrol or diesel cars, the median is also £500 and the average is very close to this.) For senior management, the median monthly car allowance for hybrid or electric vehicles is £615. The average is again a little higher, at £636. (For petrol or diesel cars, the median is £595 and the average is £631, indicating a spread that is skewed towards the better payers.)

Finally, for directors, the median monthly car allowance for hybrid or electric vehicles is greatest of all at £822, some 34% above the median for senior managers and nearly 80% more than the median amount for non-management staff. As for the other groups, the average is a little higher, at £864, showing that more pay above the typical amount than below it. (For petrol or diesel cars, the median is £815 while the gap with the average, which stands at £871, is even wider than for environmentally friendlier models.)

Mileage reimbursement rates

Over four-fifths of respondents (84%) follow the HMRC advisory fuel rates when it comes to compensating staff for mileage clocked up on business. Among the remainder, the mileage reimbursement rates for employees vary between a minimum of 7 pence per mile (ppm) for employees driving electric company cars, all the way up to 45ppm for employees driving their own diesel cars.

About the survey

The survey received responses from 57 organisations across the economy, together employing nearly 1 million staff, with most responses (35, or 61%) from companies in private services. Some 21 responses, or 37% of the total, were in manufacturing, while just one came from the not-for-profit sector. Most of the participating organisations were large employers, with the median workforce size showing at 2,500.

Want to know more about company car tax and mileage allowances?

Click below to read our article on the current tax implications for employees with a company car, as well as the statutory allowances for mileage: