Company Assets and Personal Use: When ‘Perks’ Become Taxable in 2025/26
Many directors and business owners assume they can use company assets for personal reasons — a laptop here, a holiday let there — without consequence. After all, they own the company, right?
But HMRC sees things differently.
In 2025/26, directors and shareholders who use company-owned assets for personal benefit could be facing unexpected tax bills unless they’ve structured things correctly. This post explains how personal use of company assets is taxed, what counts as a Benefit in Kind (BiK), and what to watch out for when company resources are used outside business hours.
What Counts as a Company Asset?
Company assets include:
- Vehicles (cars, vans, electric bikes)
- Property (holiday homes, investment flats)
- Equipment (phones, computers, tools)
- Memberships (gyms, clubs)
- Furniture and fittings
- Shares and investments (if used to provide benefits)
If the asset is owned by the limited company and provides personal benefit to an individual, HMRC may classify it as a benefit in kind — and that means tax.
Key Rule: Company ≠ Individual
Even if you’re the sole director and shareholder, your company is a separate legal entity.
This means:
- You can’t treat the company’s assets as your own
- Any personal use of those assets needs to be accounted for correctly
- If not, HMRC may assess additional income tax on you — and Class 1A NICs on the company
Common Situations That Trigger Tax Problems
Here are some of the most frequent examples where “casual” personal use becomes a tax issue:
1. Company-Owned Property Used for Holidays
If your company owns a property (e.g. holiday let or second home) and:
- You or your family use it personally
- No rent is paid, or the rent is below market value
Then HMRC will assess a benefit in kind on the annual value of the property — even if it’s just used for a few weeks.
Example:
Your company owns a holiday cottage worth £300,000. You use it for 4 weeks a year.
HMRC could treat this as a benefit in kind, calculated on the annual rental value of the property, pro-rated for personal use — unless full market rent is paid.
Tip: If directors or family want to use the property, consider charging full commercial rent and formalising the arrangement via a licence or lease.
2. Company Cars and Fuel
Company cars are one of the most commonly taxed benefits.
- Any private use, including commuting, triggers a BiK charge
- The value is based on list price, CO2 emissions, and fuel type
- Providing fuel for private use creates a separate BiK
In 2025/26, even electric vehicles still attract a 2% BiK — low, but not zero.
Tip: If you provide a vehicle through the company, make sure the BiK is declared, or structure it as a business-only pool car (strict conditions apply).
3. Company Phones, Laptops and Equipment
Providing a mobile phone or laptop for business use is normally tax-free — if:
- It’s issued for business purposes
- There’s minimal or incidental private use
- The asset is owned by the company, not reimbursed
However:
- If the company pays your personal phone bill, that is taxable
- If you use business laptops for home entertainment or your children’s homework, this could be seen as significant personal use
Tip: Keep documentation showing that devices are provided primarily for business and that personal use is minimal.
4. Personal Use of Tools, Equipment or Machinery
If a company owns equipment — e.g. tools, vans, construction equipment — and it’s used on weekends for personal projects, that may be taxable.
Even occasional use by the director at home could count as a benefit in kind unless:
- The company charges you for the use
- The asset is made available to all employees on similar terms
HMRC’s guidance is clear: if a company asset is “made available” for personal use — even if rarely used — it’s taxable.
5. Use of Company Bank Cards or Accounts
Paying for personal expenses through the company, even temporarily, is risky.
Examples include:
- Grocery shopping on a company card
- Paying for family holidays
- Online purchases not clearly for business
Even if the amounts are later repaid, HMRC could:
- Treat it as a director’s loan
- Trigger a Section 455 tax charge (33.75%) if not repaid within 9 months
- Classify it as income, and demand tax and NICs
Tip: Avoid grey areas — keep personal and company spending strictly separate.
How Are Benefits in Kind Taxed?
When a benefit in kind applies:
- The cash equivalent value is added to the director’s taxable income
- Income tax is due at the marginal rate (20%, 40%, or 45%)
- The company pays Class 1A NICs at 13.8% on the benefit
The benefit is reported on a P11D, or through payrolling benefits if the company is registered.
How to Avoid Unwanted Tax Charges
Here’s how to stay on the right side of the rules:
1. Charge Market Value Rent or Usage Fees
If a company-owned asset is used personally, charging a fair market rate for that use can help eliminate or reduce the BiK value — but it must be properly documented and paid.
2. Keep Written Policies
Having a written company policy on asset use (e.g. phone and laptop policy, vehicle use, etc.) can help defend against HMRC scrutiny.
3. Use Director’s Loan Account Carefully
If the director pays for personal use through their Director’s Loan Account, the company can avoid a BiK — but only if the DLA stays in credit, or loans are repaid promptly.
4. Declare Benefits Properly
If the company does provide taxable benefits, make sure:
- They are reported on P11D forms
- The company pays Class 1A NICs
- The director understands their income tax liability
Summary
It’s easy for business owners to blur the line between company assets and personal use — especially in small companies. But HMRC sees any non-business use of company-owned assets as a taxable benefit, unless specific conditions are met.
To avoid problems:
- Treat your company as a separate legal entity
- Don’t assume assets are tax-free just because they’re used “a little” personally
- Keep good records, charge for private use where needed, and declare any benefits correctly
The cost of getting it wrong can be high — in penalties, tax arrears, and unwanted HMRC attention. A short conversation with your accountant before using company property for personal reasons could save you a large tax headache later on.
