Company Car Issues

Once you have taken the decision to provide an employee with a company car, there are several things you need to think about which then need to be documented and communicated to the car driver. This is often done in their contract of employment and sometimes in a company car policy, either in an employee handbook or as a stand-alone policy.

Who can drive the car?

Will the employee’s partner be allowed to drive the car or only the employee? Will your company insurance cover their children driving a company vehicle.

Who pays for petrol?

When you provide a company vehicle, it is common practice to pay the lower HMRC petrol rate for company mileage. If you pay for personal mileage as well, including travel to and from work, this then becomes a taxable benefit.

Fines, tolls and parking

Be very clear about what the company pays for. In most cases, it is good practice to pay for parking and tolls, but employees should pay for any fines they incur e.g. parking tickets and speeding fines.

Overseas travel

If your employee is travelling to Europe on holiday, are they allowed to take the company car? If so, are there any restriction? How does the mileage impact on your lease agreement?

Mobile Phones

The law is VERY clear in this respect. Noone should be driving while using a mobile phone – even hands-free! As an employer, you CANNOT require your staff to answer the phone or make calls while driving. They should actively be told not to.

Corporate Manslaughter

Should you phone your employee while they are driving and they have an accident and cause a fatality, both the employer and the employee may face charges – this is whether they are driving their own or a company car. Make sure your policy is clear and that all car drivers receive training.


Whatever you decide as your company car policy, it is essential that it is applied consistently to all employees. While the type of car may vary depending on role or grade, you must avoid any risks of a discrimination claim.


There are lots of elements which need to be considered, decided, communicated and adherred to beyond the decision to give an employee a company car. It is essential that all elements are fully and properly considered before a ‘nice to do’ becomes at best  headache and at worse a significant risk to your business.

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