In association with Renault Business
Can I use a company car for personal journeys? The rules explained
The good news is that fleet car drivers can absolutely use a company car for personal journeys – provided they adhere to the terms of their company-car agreement. Here’s how to stick to the rules...
A shiny new fleet car is an undeniably wonderful thing, and no doubt you’re going to be fairly keen to show it off to family and friends – and anyone who happens to give it a second glance. The road network is your oyster, no matter whether you’re on a journey for work or heading off on a family outing at the weekend. But wait, are you really allowed to do all these personal miles in the new car?
Thankfully, in most scenarios, you are. There’s no legal impediment on how you use your company car. But you also need to check whether or not your company has imposed any rules on how you use your car on personal trips – and the easiest way to do that is to get in touch with either your line manager or your firm’s HR department.
There’s one big issue to be aware of – whether or not the company car isn’t actually a company car and is in fact a pool car, which must not be used for personal trips. That’s usually because the company is treating the cars as pool cars for tax purposes.
In those cases, if you suddenly use the car as a private vehicle, HMRC will regard it as a perk, and therefore you’ll be expected to pay benefit-in-kind (BIK) tax on it. And to try to avoid this is against the law.
What is a private journey?
It might be tempting to think that the term “private journeys” covers only holiday travel, weekend outings, or even trips to the supermarket. But you should be aware that even your daily commute to and from the office is regarded as a personal trip.
So, if your vehicle isn’t actually a company car, and is instead a pool car, it must be left at your place of work overnight, and you’ll need to make your own way home, whether that be in your own car, on public transport, or walking and cycling.
In short, the answer to the initial question about whether you can use your car for personal journeys is yes, you can. However, you must make sure you don’t end up on the wrong side of the law simply because you don’t know about certain rules and regulations put in place by your company.
Who pays for fuel I use on private trips in my company car?
Many employers will cover the cost of the fuel you use on private trips, and indeed many do as an extra benefit (it’s known as fuel benefit). This is perfectly legal.
But there’s no such thing as a free lunch, so you need to remember that you’ll need to pay tax on it, on top of the company car tax you’re already paying on the car itself.
And of course, electric vehicles are becoming ever more popular because of their company-car taxation benefits, but what about the cost of their “fuel”? Well, many employers also allow you to claim back the cost of charging up using a home or public charger, although as with fuel reimbursements, you’ll need to pay tax on the cost.
There is another option. If your company provides workplace chargers for the use of its employees, you can charge up your EV without having to even think about tax. This is because HMRC doesn’t see the electricity as a perk, even if it allows you to carry out personal mileage.
Read more: The best electric company cars >>
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