Travel Allowance Or Company Car?

Companies have several responsibilities towards their employees and vice versa. Particularly, if travel is involved, employees can enjoy one of two benefits: travel allowance or using the company car. The former is a type of allowance provided to an employee to cover travel expenses. Typically, this is paid in one of three ways: company credit card, cash or per diem. A company car, on the other hand, is owned by the company but provided to the employee for travel purposes.

Gumtree advises employees to stay updated on company travel policies as costs that are not covered in writing may not be reimbursed.

So, what is the fundamental difference between the two? In the case of a company car, the company is responsible for financing, insurance and maintenance of the vehicle. The company may also pay for fuel in part or whole. However, the tax may be the onus of the employee.

When it comes to travel allowance, the employee uses his/her own car for travel purposes. Thus, they are responsible for financing and repairs of the vehicle. However, the company may provide monetary compensation for travel during working hours.

The following are the benefits of two travel policies:

Company car:

  1. Low Benefit-in-Kind (BIK) rates
  2. No depreciation costs
  3. Opportunity to drive a new car
  4. Avoid the burdens of a financial responsibility
  5. Insurance, maintenance and servicing done by the company
  6. No unexpected costs

Car allowance:

  1. Flexibility of choosing your own car
  2. Option to lease or buy as per your financial means
  3. Potential to profit if you own the car

Now that you’ve got the knowledge, it’s time to shop! Head to gumtree.co.za or your Gumtree app (click for Apple & Android) and don’t forget to use your location settings to find cars and bakkies close to home.

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