A company car available for private use can create a taxable benefit. The cost to the employee and employer needs to be considered alongside the purchase or lease cost.
Understand the benefit calculation
The car’s list price, fuel type and emissions are relevant, with additional rules for particular vehicles and arrangements. An electric car should not simply be assumed to be tax-free.
Employee contributions may affect the calculation if the conditions are met. Older vehicles and vehicles described commercially as vans can need closer review.
Use the official company-car calculation guidance for the applicable benefit percentage. Our company-car reference links to further sources.
Review private use and fuel
Ordinary commuting generally counts as private travel. Pool-car treatment is subject to conditions about actual use and availability; the label alone is not enough.
Employer-provided private fuel can produce a separate benefit. Consider whether providing it is worthwhile and what is required if the employee reimburses private fuel.
Compare alternatives
Using a personally owned car for qualifying business journeys may allow mileage payments under the relevant rules. Keep journey records and check the approved mileage guidance before setting reimbursement rates.
Sole traders and partners instead need to consider the business and private proportions of their own vehicle costs. Compare the complete arrangement rather than selecting a vehicle on a single tax percentage.