One of the benefits of being employed is you might be able to get a company car. There are tax implications of course, but for some employees, it makes sense to get a company car from your employer.
Where things can get murky is whether family members can take advantage of this benefit. For example, can your partner, wife, or husband drive your company car? And if so, how does that work?
As with anything like this, it’s not cut and dry, so here’s a short answer followed by the reasons and possible routes to take. As we guide you through whether your partner can drive your company car.
Can my partner drive my company car?
You partner might be able to drive your company car if they have permitted it. You will need to check your company car policy on company car usage before letting your wife, husband, or partner drive your company car. Check your company car has an additional driver policy on the insurance, and that they fit the insurance criteria.
With the answer above, we are only considering partners who are not employees of the same business i.e. if you run a limited company and both your partner and yourself are employed by that company there are different rules and tax implications and we would suggest you read our separate guide “can I give my wife a company car”.
Considerations when a partner or spouse drives your company car
There is always a chance that someone outside of the business may end up behind the wheel of a company car, whether a wife, husband, girlfriend, son, or daughter. Family members using a company car is expected as they share driving duties in evenings and weekends.
This is fine if it is managed properly.
If someone says they are insured to drive as their policy covers them for other vehicles 3rd party this does not apply to company cars. They are allowed to drive a vehicle with the consent of the owner, and as a company car driver, you are not the owner.
Whether you allow your wife to drive your company car is up to the company.
Leased cars issued to employees remain company assets and must be returned to the company on demand. Consent must be provided by the company for your girlfriend or wife to drive your company car as you do not own the vehicle.
Handy Hint: If you have a company car and you want to use it for making personal trips you will receive a benefit in kind and pay tax. If you would like to understand how you can minimise that tax please feel free to read our guide on “how do I avoid paying tax on a company car”.
What does your company car policy say? Can family members drive your company car? Do they have to be a particular age, do they have to be named on the insurance policy etc.
These are all things you will need to consider when deciding whether your family members or partner can drive your company car.
Another question to consider is whether the company car is leased? Are the rules different as your company does not own the vehicle? Can my wife drive my company leased car?
The answer is yes, your wife can drive the company car if the person has been granted permission by the company named on the lease and they are adequately insured. Your partner will either need to be insured on the company’s insurance policy or hold their own comprehensive car insurance.
Something also to consider when driving a leased car is that even a comprehensive insurance policy may not be adequate. DOC (driving other cars) is a feature of some fully comprehensive insurance policies, but not all, plus DOC does not apply to leased vehicles.
Each lease agreement will be different so before allowing your wife, husband, or spouse to drive your company-leased car we would advise you to check the lease agreement and speak to your lease and insurance company before doing so.
If you run your own business, you might be thinking about getting a second company car and then letting your partner drive it. We’ve written a guide previously about company directors having two company cars which will help you decide if it’s worth doing.
Handy Hint: We’ve just released our annual guide to paying VAT on a company car lease including all you need to know about how to claim VAT back.
Can my partner be insured on my company car?
Yes, your partner can be insured on your company car. If the company has an additional driver policy, they may well extend cover to partners, providing they fit within certain criteria.
Always clarify with your company that colleagues or partners are covered before you let them drive.
Typically, if the company owns the vehicle, they will arrange company car insurance, usually under a motor fleet, multi-driver policy.
If the company allows you might also arrange your own insurance, but you would need to make the insurer aware that you are not the owner or registered keeper. Below is a great extract from car.co.uk on the subject of insuring a car you don’t own.
“When taking out a car insurance quote, most insurance policies expect that you are the owner and registered keeper of the car. If you don’t own the car, some insurers will have restrictions about the cars you can insure. Usually, you can only insure a partner’s car, one owned by a parent, an employer’s car or a leased vehicle.
Most insurers assume that you own the car insured. If this is not the case, and you have not told the insurance company about ownership details, the policy will be invalid.
It is possible to take out your own car insurance policy to cover you for a vehicle that the owner has also insured, though you must not be the main driver.
Some insurers will charge you more for a policy to cover a car that you do not own, but like all insurance cover, it can pay to shop around or use price comparison sites.
The registered keeper of a car may not be the owner.
For example, if you have a company car, your company owns the vehicle but you can be registered as the keeper. The company may have an insurance policy that covers all the cars it owns. You will be qualified to drive the car and be covered by the company in this instance.
If you hire a rental car, you will have insurance cover to drive it, but may face hefty excess charges for any damage. You can take out additional insurance to cover these excess charges.”
If you arrange your own insurance, then you could add your partner, husband, or wife to be insured on your company car.
Whether you allow your partner, husband, or wife to be insured on your company car or not it is up to the company whether they can drive it.
Cars issued to employees remain company assets and must be returned to the company on demand.
Consent must be provided by the company for your partner to drive your company car as you do not own the vehicle and without consent, they will not be insured.
Conclusion
Family members can use your company car, providing that your company allows it, and the car is insured for it. So, if you want your husband, wife, spouse, partner, or even children to drive your company car, do the checks first.
More small business owner guides…
Header image via https://unsplash.com/photos/XuDPnpox8tc
Jon has been in business since 1999, and in that time worked with more than 300 small business clients. As well as being an accountant, he is also an early adopter of tech, and has helped small businesses to leverage the power of their computer systems by creating software to automate and simplify accounting tasks.
