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HMRC internal manual

Employment Income Manual

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Car benefit: meaning of private use and business travel

Sections 118(2) and 171(1) ITEPA 2003

Private use, Section 118(2) ITEPA 2003

It is important to understand what private use means in the context of car benefits, as one of the basic conditions for a car benefit charge to apply is that the car is available for private use, see EIM23020 and EIM23300.

Private use of a car made available to a director or employee (or to members of his or her family or household) means any use other than for the employee’s business travel.

Business travel, Section 171(1) ITEPA 2003

It is important to understand what business travel means in the context of car benefits because private use means all use that is not business travel.

Business travel means any travelling for which the expenses would be deductible under the travel rules in Part 5 Chapter 2 ITEPA 2003 if they were incurred by the employee. Broadly, this means travelling expenses that involve two types of business journey:

  • journeys that employees have to make in the performance of their duties (see EIM32350 onwards) and
  • journeys that employees make to or from a place they have to attend in the performance of their duties, but not journeys that are ordinary commuting or private travel (see EIM32000 onwards).

An ordinary commuting journey counts as private use. This is so even if the employee is obliged to take the car home because he or she is on call (see Gurney v Richards (62TC287) and EIM32240 onwards).