SE23080 - Car benefits: meaning of private use and business travel

Section 168(5)(c) and (f) ICTA 1988

Private use

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 SE23002, SE23003 and SE23081.

'Private use' of a car made available to a director or employee within Part V Chapter II ICTA 1988 (or to members of his or her family or household) means any use other than 'business travel'.

Business travel

There are two reasons why it is important to understand what 'business travel' means in the context of car benefits:

• 'Private use' means all use that is not 'business travel' – see above.
• For years up to and including 2001/02 the car benefit charge may be adjusted to take account of the amount of business travel for which the employee has used the car – see SE23300 onwards.

From 6 April 1998 business travel means any travelling for which the expenses would be qualifying travelling expenses if they were incurred by the employee. Broadly, qualifying travelling expenses are travelling expenses which involve two types of business journey

• journeys which employees have to make in the performance of their duties, and
• journeys which employees make to or from a place they have to attend in the performance of their duties - but not journeys which are ordinary commuting or private travel.

Detailed guidance on the types of journey which give rise to qualifying travelling expenses from 6 April 1998 is contained in SE31800 onwards and SE32000 onwards.

For 1997-98 and earlier tax years business travel meant travel which an employee was necessarily obliged to do in the performance of the duties of the employment. (See SE31800 onwards and SE32350 onwards).

Despite the change of wording in the definition of 'business travel' from 6 April 1998, the basic approach has not changed. Under both the old and the new wording the travel has to pass the test imposed by the Schedule E expenses rule in Section 198(1) ICTA 1988.

An ordinary commuting journey counts as private use. This is so even if the employee is obliged to take the car home because he is 'on call' (see Gurney v Richards (62TC287) and SE32380 onwards and SE32240 onwards).