You might think that you can use your company car for whatever you want, even outside work, but failing to comply with the terms of your agreement could land you, and your employer, in trouble...
If you’re about to be lucky enough to be given a company car or van as part of your job, you might be wondering whether you can legally use it for private journeys as well as company business.
Put simply, the answer is yes. There are no restrictions in law on the use of your company vehicle for personal journeys.
Should I drive my car for business use only?
However, there is a caveat here. If your employer has told you that you may use your car for business journeys only, you must abide by this rule. Why? Well, if that’s the case, it’s likely that your employer is not reporting the car as a company car, or paying tax on it as such.
If that’s the case, and you continue to use the car as a private vehicle, even for short journeys, you could find yourself in trouble, because the car would then be treated as a benefit – and you should be paying company car tax on it. If you’re not, you could be breaking the law.
Remember too that, in the eyes of the law, commuting to and from a place of work is considered to be private use. So if your employer has stipulated that your company car is for work use only, you can’t drive it home – it has to be left at work. Driving it to and from your place of work instantly places you, and potentially your employer, in breach of the tax rules.
Who pays for fuel for my company car?
It’s perfectly legal for your employer to cover the cost of the fuel you use privately in your company car, too, and some do as an additional benefit, which is known as fuel benefit.
However, keep in mind that, again, you’ll have to pay tax on this, in addition to the company car tax you’re already paying on the car that you use privately.
The exception to this is if you use an electric or plug-in hybrid car, and charge it up at work. If you do this, HMRC doesn’t consider the electricity you’re using as a benefit-in-kind – even if it’s for private use.
If you charge up a company car at home or on public chargers, though, and your company foots the bill, you’ll still need to pay tax on the cost.
Keyword: Can I use a company car for personal use?