Flexible business vehicle subscriptions 🤩

Car subscription for your business (and employees)

Learn everything about getting a company car as a monthly subscription!

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If you're a business owner or decision-maker, you're probably always looking for ways to streamline operations, reduce costs, introduce employee perks and enhance your team's satisfaction.

However, buying or leasing brand-new company cars isn’t always possible or necessary, especially for small and medium-sized businesses. 

This guide is for business owners seeking a flexible, affordable business car subscription that meets their staff’s needs. We explain why subscriptions can be a viable alternative to business vehicle leases.

Especially if you're considering electric vehicles (EVs) for your fleet, this guide will provide unique insights and useful facts to help you make the best decision for your business.

What is a business car subscription?

A car subscription for your business is a service that allows companies to use a car, or a fleet of vehicles, for a fixed monthly fee. It's similar to a lease but with more flexibility and often more services included. 

Companies like elmo and Onto offer a range of electric vehicles, while others like Volvo offer non-EVs and hybrid models that can be subscribed to on a monthly basis. The subscription typically includes the car, insurance, maintenance, servicing, breakdown, and sometimes fuel or charging costs.

Employers can subscribe to as many cars as they need for their employees — while the car subscription provider takes care of the admin. 

Everyone in the company could gain all the perks of driving a company car without long-term contracts or ownership commitments. 

How does it work and what is the process? 

A business car subscription works much like any other subscription service. You choose the car or cars you want for your business, pay a monthly fee, and that's it. 

The signed up process usually looks like this:

  1. Choose a provider: Research providers such as Onto, and elmo, to find one that suits your business needs.
  2. Select a car: Browse the selection of cars offered by the provider. Consider factors such as size, fuel type (including electric options), and cost.
  3. Create a business account: Sign up for a business account with the provider. This usually involves providing some basic information about your business.
  4. Book the car: Once you've chosen a car, you can book it through your business account. You may be able to name an employee as the main driver at this stage.
  5. Deposit and fees: Most providers don't charge a deposit, but there may be a delivery fee.
  6. Approval and delivery: After booking, the provider will check approval and confirm a delivery date. The car will be delivered to the chosen address.

The process is usually straightforward and can often be done entirely online. 

You can start by looking at your chosen car subscription provider's website to learn more about them or use our impartial subscription provider comparison page. 

Choose your car(s) and subscription options (including additional mileage and drivers if needed). Your provider will calculate your total monthly cost and invoice you monthly for as long as your subscription lasts. All fees and expenses are included in your monthly payment.

Most subscription providers allow you to cancel with just 30 days’ notice, so it’s easy to unsubscribe and return the car if you change your mind.

The difference between a company car subscription and a salary sacrifice scheme

There are two main types of business vehicle subscriptions:

  • Company car subscription — ideal for high-salary employees who regularly travel for business.
  • Salary sacrifice scheme — ideal for employees who want to save money on a car subscription

The business is the car leaseholder if you’re taking out a company car subscription. You’ll choose who is eligible to drive the cars assigned to your business.

With a salary sacrifice scheme, you can give your permanent employees the option to take out a car subscription in their name as a benefit-in-kind. The benefit-in-kind tax rate depends on which kind of car you drive. The BIK rate is set at just 2% for pure electric cars until the 2025/26 tax year. For other vehicles, the BIK rate can be as high as 37% — so how much employees save depends on their chosen car.

Some providers, such as Electric Car Scheme, offer their salary sacrifice scheme at the same rate as the business’s National Insurance savings — so it won’t cost your company a penny to provide this perk to your employees.

Who is eligible to subscribe to a car as a business customer?

Most companies with PAYE employees can take out a car subscription for business. This includes a limited company director who is the only employee at the company.

Employers can set their own policy regarding who is eligible for a company car subscription. Most companies offer company cars to employees with certain business travel needs and/or senior staff members. Salary sacrifice schemes are usually offered to all permanent employees who have passed their probationary period.

These employees can choose whether to opt into the scheme. Remember that a salary sacrifice scheme can’t reduce employee wages to below the minimum wage, so employees on or near the minimum wage threshold may not be eligible.

Car subscription providers also set driver eligibility criteria, such as age limitscredit checks, and residency rules. Check these car subscription requirements with your provider before you sign up.

The benefits

A business car subscription benefits your company and your staff. They allow businesses to:

  • Save money on staff time and admin costs — you won’t need to arrange insurance or MOTs, and your subscription provider takes care of all breakdowns.
  • Avoid vehicle depreciation worries — because you don’t own the car, there’s no need to worry about it losing value and the impact on your corporation tax bill.
  • Offer more perks to your staff — making your employees feel valued can increase staff retention and productivity.
  • Claim back VAT — VAT-registered companies can claim back some or all of the VAT on a business car subscription.
  • Improve your environmental impact — choosing electric cars on subscription is a great way to reduce your corporate carbon footprint.
  • Only pay for the cars you need — flexible short-term subscriptions mean you can trial certain cars, give contractors or new staff access to a company car, and upgrade your vehicles regularly.

Employees can also benefit from tax savings and a flexible, affordable way to drive — whether for business or personal use. See more reasons to get a car on a subscription.

The drawbacks 

With a car subscription, you won’t own the vehicle — so you may feel like you’re not making much of an investment. 

Electric vehicles may also require more investment, such as charging points at your workplace, to help employees make the most of their subscription EVs. 

However, certain EV subscription providers offer discounts on charge point installation and EV energy tariffs.

Also, there will be virtually no car customisation available. Unlike when you buy a car, you cannot customise a subscription car to your exact specifications. We checked every business subscription vehicle provider, and none offer car customisation.

Mileage limits are another thing to keep in mind. Some subscriptions come with mileage limits (usually about 700-800 miles a month), and you may have to pay extra if you exceed these.

How much will it cost?

Just like buying a company car, the cost of a business car subscription depends on various factors, including:

  • Car make and model.
  • Car age.
  • Number of cars needed.
  • Additional mileage beyond the included limit.
  • Additional drivers registered to each car.

The average cost for a car subscription for a business can be anything from £400 to more than £1,200 for some high-performance cars (or long-range EVs). Additional fees may include delivery, usually £100 to £150, and sign-up fees (which depend on the provider). 

It’s safe to say that a Tesla Model 3 will be considerably more expensive than a Peugeot e-2008 GT, so it’s a good idea to calculate your overall fleet budget.

Remember that you won’t need to pay for additional or unexpected costs like servicing and insurance, as these are included in your monthly car subscription payment.

What’s best for your business: car subscription vs buying vs leasing? 

Company cars can help reduce your corporation tax bill. When you buy a car, you can claim it as a Capital Allowance so that you won’t pay tax on the purchase price. When you lease, hire, or subscribe to a company car, the fee can be claimed as an expense (in most cases).

But when you buy a car, it will eventually lose its value. So you’ll need to determine how this depreciation impacts your tax bill in future years. Plus, you’ll need to account for additional expenses like employee car insurance, courtesy cars, car repair and servicing, congestion charges, and road tax — not to mention staff wages for arranging all these things.

For some businesses, the tax savings may outweigh these extra costs — but for many, you can pay more when you buy a company car outright.

In recent years, business car leases and subscriptions have become popular to avoid these administrative and accounting headaches. Both allow you to pay monthly for an all-inclusive service while making the same savings as buying a car — but car leases are far more restrictive than car subscriptions. You’re often tied into a multi-year contract, which can be costly or difficult to manage if employees leave the business.

Car subscriptions are often more expensive per month. Still, you can cancel and renew your subscription whenever necessary, giving you (and your employees) greater flexibility.

£0 or a very low (refundable) deposit
Fixed monthly payments
Low commitment
Short-term, flexible ownership
Insurance & maintenance included
10% (or more) down payment
20%-40% yearly car depreciation
Very high commitment
Long-term, inflexible ownership
You're responsible for every bill
£0 or very low (refundable) deposit
All-inclusive, fixed monthly payment
Low commitment
1-month cancellation notice period
Insurance & maintenance included
Long-term lease
Large down payment at signing
Affects your credit score and history
High commitment
Voluntary termination is expensive
You're responsible for every bill

We have two very in-depth guides on the above topics, so be sure to check them out:

Which car subscription providers in the UK offer business subscriptions?

Several car subscription providers offer business vehicle subscriptions. 

Our approved partners, elmo and Onto, specialise in electric car subscriptions. 

Also, Pivotal offers a range of Jaguar and Land Rover vehicles; Volvo offers a range of its own models through its Care by Volvo service.

Each provider offers different cars, terms, and pricing, so it's worth shopping around to find the best fit for your business.

Business car subscription FAQs

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What if I want to pause or cancel my business car subscription?

Car subscriptions are highly flexible. It depends on which subscription provider you choose, but most allow you to change or cancel your subscription with one month’s notice.

This may include cancelling your subscription or reducing the number of needed cars.

Can I subscribe to a car through my business?

You can subscribe to a car through your business as a business owner. You’ll need to find out if you’re eligible for a company car or salary sacrifice if you're an employee.

This depends on your employer’s internal policy. You’ll also need to meet car subscription requirements set by the car provider and pass a credit check.

Can I subscribe to an EV through my company?

It depends on which cars are available at the car subscription provider chosen by your company. Certain car subscription providers, like Onto and elmo, specialise in electric vehicles.

Is a business car subscription tax deductible?

For most cars, yes. You can claim the monthly subscription fee as a business expense.

However, vehicles that exceed certain emissions regulations are exempt from this — so you can save more by choosing a hybrid or electric vehicle with low or no emissions. Learn more about the benefits of choosing an electric car subscription.

Is it worth subscribing to a car through my business?

It depends on what type of car you choose, how much you plan to use it, and how much you’ll save through your salary sacrifice scheme.

You can subscribe to a pure electric car at a benefit-in-kind rate of just 2%, saving you a lot of money compared with the standard income tax rate of 20-40%. The BIK rate is higher if you choose a vehicle with high emissions. So you’ll save less, but it may still be worthwhile.

Use elmo’s salary sacrifice calculator to see how much you could save with an electric car subscription.

Is a company car subscription cheaper than a personal one?

Yes. Especially when you get a car subscription through a salary sacrifice scheme, you’ll almost always pay less than if you take out your own car subscription.

Can a business car subscription only be used for business?

No. You can use your company car for both business and personal use.

What’s the difference between a personal and business car subscription?

A personal car subscription is paid for by you, whereas the company pays for a business car subscription. However, if your car subscription is part of a salary sacrifice scheme, payment will be deducted from your salary each month.

Is claiming business mileage for electric cars different from claiming for fuel?

No, claiming business mileage for electric cars is the same as claiming for fuel in traditional petrol or diesel cars. The claim is typically based on the distance covered for business purposes in both cases.

However, the rate per mile can differ. For company cars, HMRC advises either a flat rate of 9p per mile (rate from 1 March 2023) for employer-provided vehicles and the standard rate of 45p per mile or 25p per mile after 10,000 miles for employee-provided vehicles. Hybrid cars are treated as either petrol or diesel for fuel rates.

If employees use their own personal vehicle for business travel, the Mileage Allowance Payments (MAPs) for electric cars are the same as for Internal Combustion Engine (ICE) vehicles: 45p per mile for the first 10,000 miles per year and 25p per mile after that.

So, while the process of claiming is the same, the rates can differ depending on the type of vehicle and whether it's a company car or a personal car being used for business travel.

Can a new business offer car subscriptions to its employees?

Usually, yes. Most startups and new businesses can sign up for a business car subscription, as the eligibility criteria are less strict than for long-term leasing. However, your employees must pass a credit check before they’re approved to drive a car on a subscription.

How does car delivery and collection work for businesses?

You can decide where the car(s) are delivered to your business premises or your employee’s home address. Providers may charge a fee for delivering or collecting a car, especially if it’s far from their depot. Some providers may allow a named driver to collect the vehicle from their depot.

Find out more about how car subscription delivery and collection work.

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