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§ 70% of companies offer employees a choice between car and cash allowance
§ Average car allowances range from £4,600 to £10,300
§ Mercedes 320 is most common car for company heads
According to a new survey by Mercer Human Resource Consulting, 7 in 10 (70%) companies offer employees the choice between a company car and a cash allowance.
The average annual car allowance for company heads is £10,300. Senior managers, middle/junior managers and sales representatives receive £8,200, £6,500 and £5,200 a year on average respectively. Professionals receive the lowest average allowance of £4,600 - less than half the allowance for company heads.
The survey, involving 245 UK companies, focuses on the prevalence and features of car benefits together with the related tax issues. The data is used to help companies set their car benefit policies.
Nature of car benefit
For employees who opt to receive a car instead of an allowance, the typical purchase price varies significantly according to job role. For example, the average cost of a car for company heads is double that of a car for professionals - £32,800 and £16,000 respectively.
Forty percent of organisations allow employees to purchase the car at the end of the replacement period.
?Company cars represent one of the most expensive items in an employee benefit package,? said David Wreford, European Principal at Mercer. ?Company car policies now tend to focus on providing better value for both employers and employees.?
Mercedes 320 is the most typical car for company heads, while senior managers generally opt for a BMW 5 Series. Typical cars for lower-ranking employees include Audi A4, VW Passat and Vauxhall Vectra.
Additional and alternative benefits
Over 8 in 10 companies pay for all fuel used by company heads and senior managers (85% and 83% respectively), while the remaining organisations pay for fuel used for business purposes only. In contrast, less than 4 in 10 companies (37%) pay professionals for all fuel used.
The survey found that car use also depends on workplace status. For example, 94% of company heads can use their cars for business and personal purposes compared with 47% of sales representatives and 35% of professionals.
Mr Wreford concluded: ?Both employers and employees tend to underestimate the costs associated with company cars and the value of the cash alternative. As company cars become less and less tax efficient, more employees are likely to opt for the cash.
?Some brave companies have moved away from providing cars altogether and simply offer a cash allowance.?
These results are part of an International survey involving 5,100 companies in 45 countries. Copies of Mercer?s 2005 International Car Policies Report cost ?750 and are available from Client Services, Mercer Global Information Services, Geneva at +41 22 869 3000 or www.imercer.com/carpolicies
§ Average car allowances range from £4,600 to £10,300
§ Mercedes 320 is most common car for company heads
According to a new survey by Mercer Human Resource Consulting, 7 in 10 (70%) companies offer employees the choice between a company car and a cash allowance.
The average annual car allowance for company heads is £10,300. Senior managers, middle/junior managers and sales representatives receive £8,200, £6,500 and £5,200 a year on average respectively. Professionals receive the lowest average allowance of £4,600 - less than half the allowance for company heads.
The survey, involving 245 UK companies, focuses on the prevalence and features of car benefits together with the related tax issues. The data is used to help companies set their car benefit policies.
Nature of car benefit
For employees who opt to receive a car instead of an allowance, the typical purchase price varies significantly according to job role. For example, the average cost of a car for company heads is double that of a car for professionals - £32,800 and £16,000 respectively.
Forty percent of organisations allow employees to purchase the car at the end of the replacement period.
?Company cars represent one of the most expensive items in an employee benefit package,? said David Wreford, European Principal at Mercer. ?Company car policies now tend to focus on providing better value for both employers and employees.?
Mercedes 320 is the most typical car for company heads, while senior managers generally opt for a BMW 5 Series. Typical cars for lower-ranking employees include Audi A4, VW Passat and Vauxhall Vectra.
Additional and alternative benefits
Over 8 in 10 companies pay for all fuel used by company heads and senior managers (85% and 83% respectively), while the remaining organisations pay for fuel used for business purposes only. In contrast, less than 4 in 10 companies (37%) pay professionals for all fuel used.
The survey found that car use also depends on workplace status. For example, 94% of company heads can use their cars for business and personal purposes compared with 47% of sales representatives and 35% of professionals.
Mr Wreford concluded: ?Both employers and employees tend to underestimate the costs associated with company cars and the value of the cash alternative. As company cars become less and less tax efficient, more employees are likely to opt for the cash.
?Some brave companies have moved away from providing cars altogether and simply offer a cash allowance.?
These results are part of an International survey involving 5,100 companies in 45 countries. Copies of Mercer?s 2005 International Car Policies Report cost ?750 and are available from Client Services, Mercer Global Information Services, Geneva at +41 22 869 3000 or www.imercer.com/carpolicies
