--- title: "Business Recovery: Company car or car allowance? Which one is better?" description: "Business recovery: Company car or car allowance? Which one is better? this is one of the top questions we are asked. Lets dive into the pro's and cons" image: https://blog.avisfleet.co.za/hubfs/Imported_Blog_Media/a_car-Aug-24-2021-08-46-59-79-PM.jpg --- [![AFS favicon](https://blog.avisfleet.co.za/hubfs/AFS%20favicon.png)](https://blog.avisfleet.co.za/) - [About us](https://www.avisfleet.co.za/about-us) - [Solutions](https://www.avisfleet.co.za/solutions) - [Blog](https://blog.avisfleet.co.za/latest-news) - [Contact us](https://www.avisfleet.co.za/contact-us) - Countries - [Zambia](https://www.avisfleet.co.za/countries/zambia) [![twitter icon (1)](https://blog.avisfleet.co.za/hubfs/twitter%20icon%20(1).svg)](https://twitter.com/avis_fleet) [![facebook icon (1)](https://blog.avisfleet.co.za/hubfs/facebook%20icon%20(1).svg)](https://www.facebook.com/avisfleet1/) [![linkedin icon (1)](https://blog.avisfleet.co.za/hubfs/linkedin%20icon%20(1).svg)](https://www.linkedin.com/company/avis-fleet/?originalSubdomain=za) LOGIN Close menu LOGIN TO Fleet Interactive Dealer Authorisation Pulse Tracking Pulse Logbook GO - [About us](https://www.avisfleet.co.za/about-us) - [Solutions](https://www.avisfleet.co.za/solutions) - [Blog](https://blog.avisfleet.co.za/latest-news) - [Contact us](https://www.avisfleet.co.za/contact-us) - Countries - [Zambia](https://www.avisfleet.co.za/countries/zambia) [Fleet Consulting](https://blog.avisfleet.co.za/latest-news/topic/fleet-consulting) # Business Recovery: Company car or car allowance? Which one is better? [By Avis Fleet](https://blog.avisfleet.co.za/latest-news/author/avis-fleet) August 24, 2020 - - - Companies that have fleets are certainly trying to figure out the most cost-effective and efficient solutions, especially in these times of economic uncertainty.   It’s not an easy decision when you’re looking at the differences between a company car and a car allowance.   ## Company car versus car allowance When it comes to the differences between company car and car allowance it’s not an easy decision to make.   Deciding which is better for you will depend on different factors: your business needs, what the vehicle will be used for etc.   At Avis Fleet we pride ourselves on being a fleet management company that can tailor solutions to suit your needs.   There are pros and cons when it comes to each option such as tax, risk and maintenance, and familiarising yourself with each affects the respective options which will help you to make the right choice that is best for your business.   ### The fundamental difference With the company car option the company manages costs of insurance, financing, maintenance and in some instances, fuel in full – the company owns or leases the vehicle but the employee is taxed for the use of the company car.   With the car allowance or travel allowance option the employee pays for costs of insurance, financing, maintenance and fuel as the employee owns the vehicle but is compensated for the travel made during operational hours.   ## How company car and car allowance options have changed In the past the company cars were not clearly defined and were open to abuse, being used for holidays, fishing trips etc.   When the vehicles were eventually returned they didn’t achieve resale value, and there were very little control mechanisms in place. Which made many businesses question whether this was the right choice for them.   [Avis Fleet](https://www.avisfleet.co.za/about-us/) will assist with putting policies in place to help with the measurables to effectively control cost including everything from fuel cost, to CO2 emissions, and the different grading in terms of benchmarking. So the benefit to our customers is that we can put the effective elements in place to mitigate risk.   Businesses used to have a limited choice of company cars which could be selected. In order to become an employer of choice they then started to look at the car allowance option.   So in the past the car allowance option became, from a SARS and tax perspective, the more favourable route to go for a company. Companies chose this option because it gave responsibility over to employees who were given their package and they could choose whatever vehicle they wanted.   After the National Credit Act employees couldn’t overextend their credit anymore which meant they had to choose vehicles that were more appropriate.   ## Tax legislation Two years ago the South African Revenue Services (SARS) changed the tax legislation so that  company car and car allowance are now more similar.   ## The danger with travel allowance One issue with this option is that staff may be overestimating mileage so that they can keep the money that they are paid out per kilometre. This activity puts businesses at risk and throws off important data.   Travel allowance is becoming a less popular option because it is often abused.   Whichever option you prefer for your business, or if you would like both options: company car and car allowance in the same company depending on your company policy, the individual needs of employees and their role in the company and the needs of the business, Avis Fleet will tailor solutions to your needs.   Use fleet services to optimise your business processes. [Find more information about our fleet solutions here](https://www.avisfleet.co.za/solutions/), or feel free to [contact us](https://www.avisfleet.co.za/contact-us) directly with any questions that you might have regarding our solutions.    If you are looking for more ways to assist with business recovery, download our ultimate guide to reducing costs in your fleet and start saving TODAY.    [![Ebook on ultimate guide to reducing fuel costs click to action ](https://no-cache.hubspot.com/cta/default/483927/29cabd6a-e230-49ef-98c3-c6d16b02bab4.png)](https://cta-redirect.hubspot.com/cta/redirect/483927/29cabd6a-e230-49ef-98c3-c6d16b02bab4) [Back](https://blog.avisfleet.co.za/latest-news/) | [All posts](https://blog.avisfleet.co.za/latest-news/) ##### You might also like ![How to make the right budget cut decisions in your fleet](https://blog.avisfleet.co.za/hubfs/Screenshot%202022-08-25%20092200.jpg) [How to make the right budget cut decisions in your fleet](https://blog.avisfleet.co.za/latest-news/how-to-make-the-right-budget-cut-decisions-in-your-fleet) August 24, 2020 ![Questions to ask your fleet supplier](https://blog.avisfleet.co.za/hubfs/Questions%20to%20ask%20fleet%20manager.jpg) [Questions to ask your fleet supplier](https://blog.avisfleet.co.za/latest-news/questions-to-ask-your-fleet-supplier) August 24, 2020 ![AARTO: Latest Developments](https://blog.avisfleet.co.za/hubfs/Blog%20Images/AARTO_%20Latest%20Developments.jpg) [AARTO: Latest Developments](https://blog.avisfleet.co.za/latest-news/aarto-latest-developments) August 24, 2020 [![twitter icon (1)](https://blog.avisfleet.co.za/hubfs/twitter%20icon%20(1).svg)](https://twitter.com/avis_fleet) [![linkedin icon (1)](https://blog.avisfleet.co.za/hubfs/linkedin%20icon%20(1).svg)](https://www.linkedin.com/company/avis-fleet/?originalSubdomain=za) - Assist Numbers - [Driver Emergency 0800 540 740](tel:0800540740) - [Road Side Assistance 0800 117 686](tel:0800117686) - [Want to buy a car? 011 973 7300](tel:0119737300) - [Intelligent Fuel Bureau 031 466 2583](tel:0314662583) - [Accident Management 0800 033 002](tel:0800033002) - [Find out more 011 552 9000](tel:0115529000) - [About us](https://www.avisfleet.co.za/about-us) - [Careers](https://www.linkedin.com/company/zeda-southern-africa/jobs/) - [Solutions](https://www.avisfleet.co.za/solutions) - [Blog](https://blog.avisfleet.co.za/latest-news) - [Contact us](https://www.avisfleet.co.za/contact-us) - [Countries](https://www.avisfleet.co.za/countries/zambia) - [Service history](https://service-history.avisfleet.co.za/) Copyright 2026. [Avis Fleet Solutions](https://www.avisfleet.co.za/). 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