Are you allowed personal use on a company car?

By Chad Lückhoff 

It's a new year, you've come off of a great festive season and you're energized for the year that lays ahead. Add to this, your boss has just come up to you and offered you a promotion! You're getting a pay increase and even better, a company car! Life couldn't be better... or could it?

While some employers will sweeten a promotion or a position with the lure of a company car, there's a few things that you will need to keep in mind.

While there is no law that states that a company car may not be used for private use, the agreement signed between you and your employer may differ. Some companies are fine with you using the car for personal use, errands and even the odd vacation or two. Most will allow this provided that it is done responsibly and the privilege isn't abused. Some however will not allow any other use other than for business purposes and for the commute from your home to the place of work. Read all the fine print and if you're unsure, have a friend (or ideally a lawyer) read through the contract before you sign.

It's good to remember that a company car is a perk and as such you can be liable for a tax on this benefit. These are known as fringe benefits and are based on a percentage of the vehicle's value. This is recalculated on an annual basis to factor in depreciation.

Your employer may deduct an amount from your salary for the use of the car and this may cover this additional tax, but you will still be liable for the outstanding amount. It is always best to have your employer, manager and financial advisor / director explain the cost implications to you before you sign for a company car.

Remember that using a company car for personal use when your employment contract states that it may not be used for private use, constitutes a breach of contract and can result in your termination from the company. You may also not use any company car for financial gain, so scrap that idea of moonlighting as an Uber on the weekends.