Company Car Taxation: Who Qualifies and What You Get
Learn how using a company vehicle for private trips affects your taxable income and how different vehicle types change the cost.
If you use a vehicle provided by your employer for your personal trips, you may be subject to specific tax rules regarding your monthly income.
Who it's for
This applies to employees who are granted the perk of using a company vehicle for private purposes.
What you get
You receive the benefit of using a company-owned vehicle for your personal life, such as running errands or taking weekend trips, rather than using your own private car.
What it costs you
Using the vehicle is considered a non-cash benefit that increases your taxable income. Under a common rule, a percentage of the car's list price is added to your monthly taxable income. This means you pay more in income tax because the government views the car's value as part of your total compensation.
The catch to know
The amount added to your taxable income depends on the type of car you drive. While standard vehicles follow a specific percentage rule, electric vehicles often benefit from a significantly reduced tax rate.
How to apply
- Confirm with your employer how they record your vehicle usage.
- Check if you are using a standard logbook to track mileage or a flat-rate percentage rule.
- Review your monthly payslip to see how the vehicle benefit is being calculated.