Business, Legal & Accounting Glossary
Strictly speaking, a company car is a vehicle owned by an employer or a leasing company and provided to an employee as a perk or as a necessity to do the job. During the 1980’s company cars became increasingly popular because of their kind treatment by the tax system.
Essentially, it was tax favourable for companies to give their staff cars and employers paid tax on only a fraction of the vehicle’s true worth.
But successive budgets in the early 1980s went some way to correct this situation and although company cars are still popular perks, the decision on whether they make financial sense to all concerned is not necessarily as clear cut as it once was.
If you’re offered a company car, consider what value it has to you in financial terms. Take into account the fact your repair bills, road fund and insurance will be taken care of by your employer, but also consider the tax bill you’ll face because perks are considered as ‘benefits in kind’ by the taxman.
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This glossary post was last updated: 15th February, 2020 | 229 Views.