What Happens to a Company Car When It’s Scrapped?

29th May, 2025

A company car reaching the end of its useful life is a significant event for any business. These vehicles are vital assets. They support daily operations for sales teams, deliveries, or employee travel. However, every vehicle has a limited lifespan. When a company car is no longer useful, scrapping a company car becomes a practical choice.

Businesses scrap company cars for several reasons. Repairs might be too expensive. The vehicle might have failed its MOT test. It may also no longer meet environmental rules. Examples include London’s Ultra Low Emission Zone (ULEZ) or Clean Air Zones (CAZ) in other cities. Many companies are also moving towards sustainable practices. They replace older petrol and diesel vehicles with electric ones.

Unlike personal cars, scrapping a company car involves specific financial and administrative duties. Whether it is a fleet vehicle or a single business car, understanding the tax effects, disposal rules, and potential recovered value is vital. The following details explain how to scrap a company car. It outlines the process for an end-of-life company car. It also shows how to get the best value while adhering to UK regulations.

When to Scrap Your Car

Knowing the right time to scrap a company car is important. It helps with business efficiency and managing costs. Several signs show a vehicle has reached the end of its practical life for business use.

Signs That a Company Car Should Be Scrapped

Excessive Wear and Tear: Years of heavy use often mean high mileage. This leads to poorer performance and higher maintenance costs. Parts like the engine, gearbox, and suspension can wear out. This requires expensive repairs. If a vehicle always needs major work, its reliability for business tasks drops. This makes scrapping a company car a more sensible financial choice.

Failed MOT Test: If a company vehicle fails its MOT test, repairs are often necessary. These repairs make it roadworthy. If repair costs exceed the car’s current market value, or its scrap value, scrapping is usually cheaper. Spending a lot on an old vehicle that gives little return is not a good business decision.

ULEZ and Clean Air Zones Compliance: Older diesel vehicles might not meet current emissions standards. This means they face daily charges when driven in major cities. Examples include London’s ULEZ or other Clean Air Zones. These charges add up quickly. This makes the vehicle costly to use in these areas. Scrapping such an end-of-life company car can cut ongoing running costs.

Rising Fuel and Maintenance Costs: Over time, a vehicle’s fuel efficiency can drop significantly. Regular, costly repairs become more frequent. When fuel and maintenance costs together become a burden, replacing the vehicle might be a better financial decision. Newer vehicles often use less fuel and have lower running costs. This improves overall business profit.

Written-Off or Accident-Damaged Vehicles: If a company car has been in an accident and the insurer deems it too expensive to repair, scrapping is often the only choice. Such vehicles are usually unsafe to drive. They would require extensive, costly repairs to be roadworthy again.

Companies that manage vehicle fleets must also consider the long-term costs of keeping old cars. Scrapping company cars that are no longer reliable can greatly reduce running expenses. It can also make the whole fleet more efficient. If you are unsure whether to repair or scrap a company car, compare repair estimates with the current scrap car value. You can check the latest scrap car prices in the UK to help you decide.

How to Scrap a Company Car

Scrapping a company car involves a clear process. This ensures you follow rules and work efficiently. Following these steps helps businesses manage disposal well.

Step 1: Get a Scrap Valuation

Businesses should start by getting a scrap value for their vehicle. The value of an end-of-life company car depends on several factors. These include:

• Make, Model, and Age of the Vehicle: Newer models or those with popular parts often get higher prices.
• Overall Condition: Complete cars with all parts intact usually get higher scrap prices. Vehicles missing major parts will be worth less.
• Location: Scrap values can change across different UK regions. This is due to local demand and transport costs.
• Market Demand: Parts from certain models might be in higher demand. This increases the vehicle’s value for salvage.

Scrap Car Network offers instant online quotes for company cars. These quotes are based on these factors. This gives a quick and clear valuation.

Step 2: Arrange for Collection

If the company vehicle cannot be driven, or if it is in a restricted area, businesses can arrange free scrap car collection. This service is very useful for:

• Companies Scrapping Multiple Fleet Vehicles at Once: Arranging one collection for several vehicles makes logistics easier and saves time.
• Vehicles Located in ULEZ or Clean Air Zones: Driving these vehicles can mean daily charges. Collection is a cost-effective solution.
• Businesses Operating from Multiple Locations Across the UK: A nationwide collection service simplifies disposal. This is true no matter where the vehicles are.

Scrap Car Network offers a free nationwide scrap car collection service to meet these business needs.

Step 3: Receive a Certificate of Destruction (CoD)

Once the company car is scrapped at an Authorised Treatment Facility (ATF), the business will get a Certificate of Destruction (CoD). This document is very important for several reasons:

• Legal Confirmation: It legally confirms the vehicle has been scrapped. This follows environmental rules.
• Fleet Management Records: It is needed for accurate fleet records and business accounting.
• Liability Release: The business is no longer responsible for the vehicle once the CoD is issued. This means no more road tax, insurance, or possible fines.

Understanding this process is key to proper vehicle disposal. You can learn more about the full scrapping process on our website.

Understanding Company Car Ownership and Responsibilities

Before scrapping a company car, you must find out who legally owns it. This decides who can approve its disposal and what steps are needed.

Who Has the Authority to Scrap a Company Car?

Owned by the Business: If the vehicle is registered under the company’s name, the business can fully scrap it. This is the simplest situation.

Leased or Financed Vehicles: If the company car is leased or financed, the business does not legally own it. In these cases, the leasing or finance company must approve the scrapping. They will have specific steps for disposing of the vehicle. This applies at the end of its term or if it becomes a write-off.

Registered to an Employee but Owned by the Business: Sometimes, a company car might be registered in an employee’s name. But the business legally owns it. In this situation, the company must update the vehicle logbook (V5C). It needs to show the company as the registered keeper before scrapping. This makes sure the right entity is responsible for disposal.

Knowing how to manage vehicle ownership details is important. You can find guidance on how to change the registered keeper of a company car on our information pages.

Financial Aspects of Scrapping a Business Vehicle

Scrapping a company car has clear financial effects for a business. This is especially true for tax and accounting.

Is Scrapping a Company Car Tax Deductible?

Yes, businesses can usually write off the disposal of an old company car as an operating expense. This means money lost from scrapping can reduce taxable income. This helps lower the overall tax burden. How it is treated depends on how the vehicle was first accounted for.

VAT and Corporation Tax Considerations

VAT Implications: If VAT was claimed on the car’s purchase, money received from scrapping might be subject to VAT. This is because disposal is seen as a supply for VAT. Businesses should talk to their accountant to ensure correct VAT treatment.

Capital Assets: For capital assets, vehicles must be listed as disposals when scrapped. This updates the company’s asset records. It shows the asset has been removed from the balance sheet.

Companies should keep detailed records of all vehicle disposal actions. It is always wise to talk to an accountant before scrapping many business vehicles. This ensures full compliance with tax rules and proper financial reporting.

What Happens to the Vehicle After Scrapping?

Once an end-of-life company car is scrapped, it goes through a thorough and environmentally sound disposal process. This happens at an Authorised Treatment Facility (ATF). This process gets the most recycling and creates the least waste.

Depollution: The first crucial step is depollution. This means safely removing all dangerous fluids from the vehicle. These include oil, brake fluid, coolant, and fuel. This stops environmental pollution.

Parts Salvaging: After depollution, reusable parts are saved. Parts like engines, gearboxes, tyres, and even interior items are carefully removed. These parts can be fixed up and resold. This provides sustainable spare parts for other vehicles. It also adds value to the scrapping process.

Metal Recycling: The remaining car body, mostly steel and other metals, is then shredded. The shredded materials are sorted. This uses magnets and other separation methods. The metals are then melted down. This recycled metal is used again to make new products. This reduces the need for new raw materials.

This detailed process ensures that at least 95% of the vehicle by weight is recovered or reused. This meets strict environmental standards. You can read more about our commitment to responsible vehicle recycling and safety features on our dedicated page.

What Happens to Insurance and Road Tax?

When a company car is scrapped, businesses must also deal with its insurance and road tax. This avoids ongoing costs and ensures they follow rules.

Car Insurance

Businesses must quickly tell their insurer to cancel or update their fleet policies. If scrapping one vehicle, the policy can be cancelled. For many vehicles, the fleet policy needs updating. This shows fewer cars are insured. This stops paying for coverage on vehicles that no longer exist.

Road Tax Refund

The DVLA automatically refunds road tax for any full months remaining on the vehicle. This refund happens after the DVLA is told the vehicle has been scrapped. Businesses should check their accounts to make sure these tax refunds are processed and received correctly. This helps get back any prepaid road tax.

Telling the DVLA about scrapping a company car is a key step. It helps manage both insurance and road tax well. You can find detailed information on how to tell the DVLA you scrapped a car on our website.

Scrapping Company Cars Across the UK

Scrap Car Network offers full business car disposal services across the UK. Our wide coverage means businesses, no matter where they are, can get efficient and compliant scrapping company car solutions. We offer services in key regions, including:

• London (including North London and South West London)
• Scotland
• Newcastle upon Tyne
• Preston

Businesses can arrange for a nationwide collection. This makes the scrapping process simpler. This is especially true for companies with vehicles in different places. Our large network ensures a convenient and reliable service.

Final Steps – Get a Scrap Quote for Your Company Car Today

Scrapping a company car should be quick, easy, and financially good for your business. With Scrap Car Network, businesses get:

• Instant Scrap Valuations: Get a fast and accurate price for your company car online.
• Free Vehicle Collection: We offer free collection anywhere in the UK. This saves you time and money on transport.
• Full Compliance: We make sure all parts of the scrapping process follow DVLA and environmental rules.

Get a free scrap quote today for your company car. For more help or specific questions, you can reach out through our Contact Page.