Difference Between A Company Car, Private Car And Commercial Vehicle.

It is important to understand the difference between vehicles, whether they are company owned, private vehicles or commercial. 

Anna Edwards·1 min read
White van in motion

What Is A Company Car?

A company car can be given to an employee as part of their job role. If the employee uses the car privately, including commuting, a benefit-in-kind (BIK) charge is applied as a ‘cash equivalent value’ onto the employee’s taxable earnings.

Advantages of having a company car

  • Insurance, servicing and maintenance are covered by your employer

  • No depreciation costs 

  • You get to drive new model cars 

Disadvantages of having a company car

  • You do not get a choice of the vehicle

  • If you leave the job, you are without a car

  • Company BIK tax rates can be high

What Is A Private Vehicle? What Is Grey Fleet?

Using a private car for business is often referred to as ‘grey fleet’. When using a grey fleet car no benefit charges are levied against the car or the fuel for either the business or employee.

Grey fleets are a cost-effective solution for companies where business mileage is typically low. Grey fleets are most commonly on a mileage claim system - so a detailed mileage log is required.

Advantages of driving a private vehicle for work

  • You can choose the vehicle

  • Companies pay less tax

  • Companies don't have the servicing and maintenance fees

Disadvantages of driving a private vehicle for work

  • Huge costs can incur for the company if large mileage is involved


What Is A Commercial Vehicle?

A light commercial vehicles (LCV) definition is any motorised vehicle other than a car or motorcycle that weighs less than 3500kg. Some examples are:

  • Lorry

  • Tractor

  • Van

  • Pick-up truck

  • Car derived van


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