Citizen’s Advice defines a benefit-in-kind as a benefit an employee receives from their role but which is not included in their salary or wages. They are sometimes referred to as simply perks or benefits of the job, and can include things like company cars.
Benefits-in-kind can help make an employer more attractive to prospective staff and can be used in the recruitment process to help make a business more competitive for fresh talent.
Some benefits-in-kind are tax free, and you don’t have to pay tax on perks if you earn less than your personal allowance.
Tax is payable on a company car only if it is also available for private use by an employee, director or their household. In most cases, the journey to and from work is defined as a private use. However, taking an employer’s van home with you overnight will not incur tax if it is not used for any other private uses.
Tax is not charged on company cars is they are provided only for business and are not available for use privately.
Fuel paid for by an employer for personal use is also taxable, unless you are a lower-paid employee.
A mileage allowance for using your own vehicle is not taxable as long as they fall within the approved mileage rates set by the government. The tax-free mileage allowance only applies for work-related journeys, but they do not include journeys to and from your normal place of work.
If you’ve found this article useful then make sure you visit our complete A-Z of business fleet terms, which provides a complete glossary so you can make an informed purchasing decision.
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