Where private fuel is provided by the employer for a company car then a separate benefit is assessable on the employee. This benefit charge is calculated by applying the same percentage figure used to calculate the company car benefit to a fixed figure which for 2014/15 is set at £21,700. The percentage is linked to the car’s CO2 emission figures.
Now is a good time to consider whether this benefit is value for money for both the employee and employer.
The alternative is to reimburse the employee for business miles using the company car advisory fuel rates. The current rates are:
| Engine size | Petrol | LPG |
| 1400cc or less | 14p | 9p |
| 1401cc – 2000cc | 16p | 11p |
| Over 2000cc | 24p | 17p |
| Engine size | Diesel |
| 1600cc or less | 12p |
| 1601cc – 2000cc | 14p |
| Over 2000cc | 17p |
Other points to be aware of about the advisory fuel rates:
- Employers do not need a dispensation to use these rates.
- Employees driving employer provided cars are not entitled to use these rates to claim tax relief if employers reimburse them at lower rates. Such claims should be based on the actual costs incurred.
- The advisory rates are not binding where an employer can demonstrate that the cost of business travel in employer provided cars is higher than the guideline mileage rates. The higher cost would need to be agreed with HMRC under a dispensation.
If you would like to discuss your car policy, please contact us.
Internet link: HMRC advisory fuel rates
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