Difference Between A Company Car, Private Car And Commercial Vehicle

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