In brief
A taxable benefit is the amount added to a person’s taxable income when they may use a company vehicle privately. It is calculated using a flat rate or a logbook.
How Does a Taxable Benefit Arise?
Someone allowed to use a company vehicle privately saves the cost of owning a vehicle. Tax law treats this benefit as part of their wages. It is added to payroll and subject to wage tax and social security contributions. Permission for private use is decisive, not how much the vehicle is actually used privately.
How Is It Calculated?
Under the flat-rate method using the 1% rule, one percent of the gross list price is assessed each month; for qualifying electric vehicles, a quarter of that amount applies. An additional amount is due for travel between home and the primary workplace, also based on the gross list price and distance.
The alternative is a logbook. It allocates the vehicle’s actual costs according to the proportion of private and business mileage. This can pay off when private use is low or the list price is high, but it requires complete records.
What Should Fleet Managers Watch For?
The underlying data. Flat-rate valuation requires the gross list price at first registration, including optional equipment, and the distance to the primary workplace. Both are often absent from fleet records and scattered among order documents and personnel files.
If a vehicle is exchanged, the value changes during the year. Without a clean handover to payroll, this regularly leads to corrections that are time-consuming to make retrospectively.
Further reading
Fleet Management Without Excel Spreadsheets
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