The difference between a company car, private car and commercial vehicle


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.

A company car is expensed in two main ways – ‘Mileage Claim’ or ‘Fuel Benefit’.

A Mileage Claim system is when the business pays for business fuel on business trips and the employee pays for private fuel on private trips. A mileage claim system requires detailed mileage logs for all business trips.

A Fuel Benefit system is used if the business pays for all fuel in the car; business and private. No mileage logs are required but an additional fuel benefit-in-kind (FBIK) charge is applied.

Private car

Private cars which are used for business trips are 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.

Commercial vehicle

A light commercial vehicle (LCV) 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

The majority of LCV’s register a nil-benefit, therefore, only business trips, commuting and insignificant private use are allowed.

If significant private trips are undertaken, this must be declared and a BIK charge applied.

If the business pays for the fuel on private trips, this must be declared and a FBIK is applied.

Mileage logs are required for nil-benefit and BIK systems. No mileage logs are required on a FBIK system.

If a business fails to declare BIK or FBIK on LCV’s they risk heavy tax penalties backdated up to 6 years.

It's not easy for an individual to keep track of all the Tax Authority's rules and requirements. That is why at ABAX we are always updated with the latest regulations - so you can avoid worrying about your taxes.

How can I fill out a mileage claim quickly and accurately?

The ABAX Triplog is a GPS unit, permanently connected with our servers, which automatically keeps track of all driving.

This means that it is always updated with the latest software, the latest tax regulations and a user-friendly interface that gives you immediate access to all this information. Our additional services include storage for seven years of all data - the minimum legal requirement by the Tax Authority.

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