Moving van on motorway

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. 

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