{"id":864744,"date":"2026-07-07T14:00:00","date_gmt":"2026-07-07T12:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=864744"},"modified":"2026-07-07T13:53:05","modified_gmt":"2026-07-07T11:53:05","slug":"warning-to-all-people-with-a-company-vehicle-as-a-perk-in-south-africa","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business\/864744\/warning-to-all-people-with-a-company-vehicle-as-a-perk-in-south-africa\/","title":{"rendered":"Warning to all people with a company vehicle as a perk in South Africa"},"content":{"rendered":"\n
Tax experts warn that the idea of a tax-free company car does not exist because of the hidden costs associated with it.<\/p>\n\n\n\n
The 2026 Budget has introduced an increase in general fuel levies. As a result, employees whose companies provide a company car but do not cover personal fuel expenses may experience higher commuting costs. <\/p>\n\n\n\n
For those whose companies cover fuel expenses, while the calculations for fringe benefit tax will continue to be based on the vehicle’s standard value, the overall corporate cost of maintaining the vehicle will increase.<\/p>\n\n\n\n
SARS considers the personal use of a company vehicle as additional income, and they calculate a monthly “taxable benefit” that is added to your payslip.<\/p>\n\n\n\n
This extra “benefit” results in an increase in your Pay-As-You-Earn (PAYE) tax, meaning you end up paying more than you would if you used your own vehicle.<\/p>\n\n\n\n
“A company car is usually not worth it. The lack of VAT recovery and the monthly fringe benefit tax make it expensive,” said Accounting and Tax firm Nuvia Auditors.<\/p>\n\n\n\n
“You\u2019re better off buying the car yourself and, if applicable, using a modest travel allowance to cover business trips.”<\/p>\n\n\n\n
The monthly fringe benefit for a vehicle is calculated as a flat percentage of its determined value, which is based on the original purchase price, including VAT but excluding finance charges. <\/p>\n\n\n\n
The percentages are as follows:<\/p>\n\n\n\n
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3.25% per month if the vehicle includes a maintenance plan.<\/li>\n\n\n\n
3.50% per month if there is no maintenance plan.<\/li>\n<\/ul>\n\n\n\n
It is important to note that, even if you have high business travel, an employee’s employer is required to withhold tax on the full fringe benefit each month.\u00a0<\/p>\n\n\n\n
The employee will receive an adjustment only after they file their tax return and provide logbook records. The accounting firm warned that this situation can create a cash flow disadvantage throughout the year.<\/p>\n\n\n\n
The group said that if an individual has very high business mileage, a company car can be advantageous due to short-term tax depreciation and the company covering costs. <\/p>\n\n\n\n
However, it is important to carefully compare this option with using a personal car and receiving a travel allowance. <\/p>\n\n\n\n
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