Car fuel benefits for employees

The car fuel benefit rules only apply to company cars that attract a car benefit tax charge. This means the rules do not apply to fuel provided for use in an employee’s own car.

However, employers can pay up to 45p per mile for company related trips in an employee’s own car. If these journeys clock up more than 10,000 miles in any tax year, the rate per mile drops to 25p. As long as the above rates are applied any mileage expenses paid will be tax-free. If rates paid are higher, any excess will be taxed as a benefit. Conversely, if an employer pays less than the approved rates the employee can claim the difference against their tax bill.

Where employees are provided with fuel for their own private use by their employers in a company car, the car fuel benefit charge is applicable. The fuel benefit charge is determined by reference to the CO2 rating of the car, applied to a fixed amount.

The fuel benefit is not applicable when the employee pays for all their private fuel use. This is known as ‘making good’. Private fuel includes the fuel used commuting to and from work. Employees should keep a log of private mileage and can then use the published advisory fuel rates to repay the cost of fuel used for private travel back to their employer. For the 2021-22 tax year, the employer must be reimbursed for private fuel use by 6 July 2022.

Source: HM Revenue & Customs Tue, 15 Feb 2022 00:00:00 +0100

Latest articles

Notifying cessation of self-employment

Any taxpayers that have ceased to be self-employed must notify HMRC of their change in status. There are a number of steps that must be followed if a taxpayer ceases trading as a sole trader or if they are ending or leaving a business

Submitting CIS nil monthly returns

The Construction Industry Scheme (CIS) is a set of special rules for tax and National Insurance for those working in the construction industry. Businesses in the construction industry are known as ‘contractors’ and ‘subcontractors’ and should be

Check employment status for tax

The Check Employment Status for Tax (CEST) tool can be used to help ascertain if a worker should be classified as employed or self-employed for tax purposes in both the private and public sector.

The service provides HMRC’s view if IR35 legislation

Class 1A payment deadline

Class 1A NICs are paid by employers in respect of most benefits in kind provided to employees such as a company car. There is no employee contribution payable. If you provided taxable benefits to staff or directors your business is likely to have a