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